annual report 2017 - hkexnews

Stock Code : 662

ANNUAL REPORT 2017

www.a�.hk

Coverageand Care

A Focus on

Contents

1Asia Financial Holdings Ltd.

Contents

Pages

Corporate Information 2

Chairman’s Statement 3

Management Discussion and Analysis 5

Environmental, Social and Governance Report 10

Corporate Governance Report 28

Report of the Directors 45

Independent Auditor’s Report 58

Audited Financial Statements

Consolidated Statement of Profit or Loss 63

Consolidated Statement of Comprehensive Income 65

Consolidated Statement of Financial Position 66

Consolidated Statement of Changes in Equity 68

Consolidated Statement of Cash Flows 70

Notes to Financial Statements 73

Corporate Information

Annual Report 20172

Corporate Information

Board of DirectorsExecutive DirectorsCHAN Yau Hing Robin (Chairman)CHAN Bernard Charnwut (President)TAN StephenWONG Kok Ho

Non-Executive DirectorsCHAN Yeow TohTANAKA JunichiYAMAMOTO TakaoSOPHONPANICH Chote

Independent Non-Executive DirectorsCHOW Suk Han AnnaMA Andrew Chiu CheungLAI KO Wing Yee RebeccaSHUEN LEUNG Lai Sheung Loretta

Audit CommitteeMA Andrew Chiu Cheung (Chairman)CHOW Suk Han AnnaLAI KO Wing Yee RebeccaSHUEN LEUNG Lai Sheung Loretta

Compliance CommitteeCHOW Suk Han Anna (Chairperson)MA Andrew Chiu CheungLAI KO Wing Yee RebeccaSHUEN LEUNG Lai Sheung LorettaCHAN Bernard CharnwutTAN Stephen

Remuneration CommitteeLAI KO Wing Yee Rebecca (Chairperson)CHOW Suk Han AnnaMA Andrew Chiu CheungSHUEN LEUNG Lai Sheung LorettaCHAN Bernard Charnwut

Nomination CommitteeCHOW Suk Han Anna (Chairperson)MA Andrew Chiu CheungLAI KO Wing Yee RebeccaSHUEN LEUNG Lai Sheung LorettaCHAN Bernard Charnwut

Risk CommitteeLAI KO Wing Yee Rebecca (Chairperson)MA Andrew Chiu CheungCHOW Suk Han AnnaSHUEN LEUNG Lai Sheung LorettaCHAN Bernard Charnwut

AuditorsErnst & YoungCertified Public Accountants22/F, CITIC Tower1 Tim Mei Avenue, CentralHong Kong

Registered OfficeClarendon HouseChurch StreetHamilton HM 11Bermuda

Head Office and Principal Place of Business16th Floor, Worldwide House19 Des Voeux Road CentralHong KongTel : (852) 3606 9200Fax : (852) 2545 3881Website : www.afh.hkEmail : [email protected]

Principal Registrar and Transfer OfficeConyers Corporate Services (Bermuda) LimitedClarendon House2 Church StreetHamilton HM 11Bermuda

Branch Registrar and Transfer OfficeComputershare Hong Kong Investor Services LimitedShops 1712-1716, 17th FloorHopewell Centre183 Queen’s Road East, Wan ChaiHong Kong

Company SecretaryLAU Chi Tak

Principal BankersBangkok Bank Public Company LimitedHang Seng Bank LimitedPublic Bank (Hong Kong) LimitedShanghai Commercial Bank Limited

Legal AdvisersConyers Dill & PearmanGallant Y.T. Ho & Co.Deacons

Share ListingMain Board of The Stock Exchange of Hong Kong LimitedStock Code: 662

Chairman’s Statement



Economic BackgroundThe global economy showed surprising strength during 2017, with rising levels of trade and investment and of commodity

prices. Developed economies saw positive economic growth without obvious inflationary pressures. The economy of China

successfully continued to adjust to a more stable growth pattern. With such a positive external environment, Hong Kong

achieved a 3.8% growth rate for the year, and unemployment fell to a 20-year low of just under 3%.

Asset markets performed strongly during the year. The S&P 500 ended the year up 19.4%, the Hang Seng Index rose by

36.0%, and H Shares increased 24.6% to the end of 2017. This partly reflected an unexpected weakening in the US dollar

despite the interest rate increased during the year, and related strengthening of the Yuan. Other factors were anticipated US

tax cuts and expectations of rising global mergers and acquisitions. With a long-term supply shortage and strong demand,

Hong Kong’s property market prices continued to rise.

Management Approach and Future ProspectsDespite the positive global environment in 2017, the medium-term outlook includes economic and political uncertainty. After

a nine-year bull market, we cannot assume a repeat of 2017’s returns, and markets may be very sensitive to possible bad

news. Central banks will probably continue to increase interest rates, probably three or four times in the case of the US, and

this is likely to dampen markets at some stages. The US administration may introduce harsher than expected protectionist

trade measures, which could have a major impact on Asia Pacific economies. Chinese policymakers must balance

deleveraging with overall market and economic stability. Hong Kong is inevitably exposed to all these possibilities.

Given this outlook, we will be very cautious on the management of our cash and direct and indirect investments in the

coming year. This is in line with our longstanding prudent approach, which served shareholders well in 2017 and in past

years. At the same time, we will remain alert to new investment opportunities with a view to the long term.

Asia Financial Holdings Limited (“Asia Financial” or the “Company”) achieved net profit attributable to shareholders of HK$468.2 million in 2017, a 27.5% increase on the HK$367.3 million reported in 2016.

This result is due to realised and unrealised year-on-year gains in the value of portfolio and other investments, underpinned by resilient underwriting profit. Returns from most joint ventures and associates were generally in line with the investment environment.

CHAN Yau Hing Robin Chairman

Annual Report 20174


Management Approach and Future Prospects (cont’d)Asia Financial’s expenses for 2017 reflected acceptable growth in staff and other costs, including charitable donations. We

will continue to watch costs, although consumer price inflation in Hong Kong remains fairly moderate.

The outlook for our insurance operations is generally positive, despite some intensive competitions in the Hong Kong

market. Management will aim to build on the current scope and quality of the business, while exploring possible new

opportunities from industry development in Hong Kong and the region.

Our focus will remain on the long term. We see great potential opportunity arising from the continued future economic

development in much of the East Asian region. In addition to investments in various projects mentioned in the “Management

Discussion and Analysis” below, we will continue to seek opportunities to build our interests in livelihood-related service

industries such as insurance, retirement, health and wellness, education and property development, focused on Greater

China and elsewhere in Asia.

This choice of investment segments is based upon the transformation of the Greater China/East Asia region as a large

middle class emerges, societies age and governments broaden market-based policies. It also fits well with our traditional

expertise and networks of clients and partners.

CHAN Yau Hing Robin

Chairman

Hong Kong, 22nd March, 2018

Management Discussion and Analysis



Key Financial and Business Performance Indicators(All changes in % refer to the same period last year)

Profit attributable to equity holders of the Company: HK$468.2 million +27.5%

Earnings per share: HK47.8 cents +29.9%

Final dividend per share: HK7.5 cents +36.4%

Total dividend per share: HK11.5 cents +43.8%

Equity attributable to equity holders of the Company: HK$7,976.4 million +13.4%

Total Assets: HK$11,982.7 million +16.8%

Return on equity: 6.2% (5.2% for 2016)

Earnings and DividendsFor the year ended 31st December, 2017, the Group recorded net profit attributable to shareholders of HK$468.2 million,

representing a 27.5% increase compared with the previous year. These results are largely due to realised and unrealised

year-on-year gains in the value of investments. Returns from joint ventures and associated companies also contributed.

The Group’s earnings per share for the year 2017 were HK47.8 cents. The Board had declared an interim dividend of HK4.0

cents in August 2017 and proposed a final dividend of HK7.5 cents, making a total dividend for the year of HK11.5 cents

per share.

Capital StructureThe Group finances its own working capital requirement through a combination of funds generated from operations and

bank borrowings.

Liquidity, Financial Resources and Gearing RatioCash and cash equivalents as at 31st December, 2017 amounted to HK$2,627,224,000 (2016: HK$2,433,390,000).

The Group had a bank borrowing of HK$150,000,000 as at 31st December, 2017 (2016: HK$150,000,000), which was

secured by certain Hong Kong listed shares, repayable on or before 29th January, 2018 and charged at 1.25% over the

3-month Hong Kong Interbank Offered Rate per annum.

No gearing ratio was calculated as the Group had no net debt as at 31st December, 2017. The gearing ratio was based on

net debt divided by total capital plus net debt. Net debt includes insurance contract liabilities, insurance payables, amounts

due to a joint venture and associates, interest-bearing bank borrowing and other liabilities, less cash and cash equivalents

and securities measured at fair value through profit or loss. Capital represents equity attributable to equity holders of the

Company.

The Group’s liquidity position remains strong and the Group has sufficient financial resources to satisfy its commitment and

working capital requirements.

Annual Report 20176


Charge on AssetsAs at 31st December, 2017, Asia Insurance Company, Limited (“Asia Insurance”) charged assets with a carrying value of

HK$119,409,000 (2016: HK$119,956,000) in favour of a cedant to secure the performance of Asia Insurance’s obligations

to the cedant under certain pecuniary loss reinsurance contracts.

The Group also pledged certain equity securities listed in Hong Kong classified as available-for-sale securities and securities

measured at fair value through profit or loss with fair value of not less than HK$150,000,000 (2016: HK$150,000,000) to a

bank to secure the interest-bearing bank borrowing of HK$150,000,000 (2016: HK$150,000,000).

Contingent LiabilitiesAs at 31st December, 2017, the Group had no material contingent liabilities.

Business ReviewInsurance

Wholly owned subsidiary, Asia Insurance achieved profit attributable to shareholders of HK$336.6 million, an increase of

41.3% on the previous year. Turnover grew by 0.6%, while underwriting profit was 60.2% down compared to 2016. (All the

above figures are before the elimination of intergroup transactions.)

The relatively low growth in turnover reflects the extremely soft and overcrowded market currently prevailing in Hong Kong.

Asia Insurance benefited from its disciplined and selective approach to business in these extremely competitive conditions.

The drop in underwriting profit was largely due to local typhoon and US hurricane losses, notably typhoon Hato, which

caused major damage in Macau. To put this result in context: the general insurance industry in Hong Kong and Macau as a

whole made a loss on underwriting for the year. Without these extreme weather losses and one-off Act-of-God savings, we

would have seen underwriting profit to be more or less the same as 2016.

The underlying performance of Asia Insurance’s underwriting reflects the company’s strength in attracting and developing

high-quality business and maintaining prudent balances between levels of reinsurance and direct insurance business and

among geographical regions.

We continued to develop our distribution channels and upgrade personal, small and medium enterprise and other products.

We are also enhancing employee skills and systems in anticipation of trends in clients’ needs and market conditions. Asia

Insurance’s reputation for service and professionalism was upheld by management and employees’ efficiency in settling

typhoon-related claims in Macau and Hong Kong during 2017.

At the end of the first half of 2017, the Insurance Authority replaced the Office of the Commissioner of Insurance as the

independent regulatory authority for the insurance industry in Hong Kong. We fully support this development, which we

believe will strengthen the regulatory framework and benefit all stakeholders in the insurance sector in Hong Kong.

Asia Insurance’s securities holdings experienced a significant year-on-year increase in investment returns, largely due to

realised and unrealised gains in trading and other portfolios. Dividend income increased, while interest income rose in line

with deposits. Other income included foreign exchange gains compared with the previous year, notably from the stronger

Yuan.



Business Review (cont’d)Insurance (cont’d)

Asia Insurance’s management expenses were in line with growth in business capacity, market pay levels and other business

costs.

The main immediate challenge facing Asia Insurance’s core business is the continued fierce price competition in the Hong

Kong insurance market. However, this situation is not likely to sustain, and industry and regulatory trends suggest a healthier

market in the longer run. We are confident that Asia Insurance is well positioned to build on its existing risk-management

and reputational strengths and grasp new future opportunities in Hong Kong and regionally. These include new distribution

channels, the targeting of new market segments, the development of emerging lines of business, and new roles for

insurance arising from regional development and integration including policy initiatives like Belt and Road and Greater Bay

Area.

Prospects for portfolio investments reflect the wider global picture. Given the high asset price valuations and possible

changes in interest rate and other conditions, management will maintain its prudent approach to management of traded

investments and the maintenance of a well-balanced investment portfolio.

Joint ventures and associates in the insurance segment all performed broadly in line with overall market conditions. BC

Reinsurance Limited, The People’s Insurance Company of China (Hong Kong), Limited and Hong Kong Life Insurance

Limited (“Hong Kong Life”) reported reasonable performances. Professional Liability Underwriting Services Limited saw

stable business.

In March 2017, Asia Insurance entered into a share sale agreement with an independent third party to dispose of 16.67%

of the issued capital of Hong Kong Life for a cash consideration of approximately HK$1,183 million before transaction

expenses. Completion of the transaction is subject to certain conditions including obtaining the necessary approvals from

the relevant authorities.

PICC Life Insurance Company Limited (“PICC Life”), in which Asia Financial has a 5% stake, continues to take advantage

of its opportunities as a company with a nationwide licence. It maintains as a major player in the Chinese market, with a

network of some 2,239 offices. PICC Life reported RMB106.2 billion in premium income for 2017, a 1.1% increase over

2016. All other business performance and risk control indicators showed positive and healthy figures. PICC Life’s insurance

liability reserves and solvency ratio were maintained at adequate levels in line with the business volume. This stake is Asia

Financial’s single biggest external holding, accounting for 12.7% of our total assets.

Other Portfolio Investment

Trading investments showed significant realised and unrealised gains in 2017, largely reflecting strength in the Hong Kong,

China and US equities markets. Returns from non-traded investments declined owing to lower dividend income from PICC

Life. Net interest rose in line with deposits.

Last year was obviously a good period for equities in particular. Our portfolio investment approach will remain long-term

and not simply focused on year-on-year fluctuations in market valuations. We will continue to place the highest priority on

preservation of core shareholder wealth. At the same time, we will remain alert to strategic and long-term opportunities

arising from structural changes in the international environment.

Annual Report 20178


Business Review (cont’d)Health Care and Wellness

Our 3.6% holding in Bumrungrad Hospital Public Company Limited (“Bumrungrad”) in Bangkok remains a very sound

investment in terms of valuation and dividends. This reflects Bumrungrad’s continuing success in attracting patients

internationally through the delivery of high-quality and good-value medical services.

The Kinnet, our wholly owned Hong Kong wellness centre aimed at healthy aging, reported a loss during 2017 before

closure of the operation in September. Client satisfaction had been high, and we will examine possible ways to meet this

market need on a commercial basis. We see very attractive prospects in Hong Kong and possibly elsewhere in serving the

growing senior population.

We continue to foresee opportunities in the health and wellness sectors in the region, owing to long-term demographic and

policy trends, and we continue to consider further opportunities, including possibly in Mainland China.

Pension and Asset Management

The Group’s holding in Bank Consortium Holding Limited (“BCH”), one of our joint ventures, enjoyed satisfactory

performance in 2017, supported by investment market conditions. Bank Consortium Trust Company Limited, a wholly

owned subsidiary of BCH, is one of the major providers of Mandatory Provident Fund services in Hong Kong.

Property Development

The Group’s interests in real estate are focused on Shanghai and represent 3.3% of our total assets. The main project is a

residential and commercial complex in Jiading, in which we have a 27.5% stake.

With the sales of some remaining units during the year, a small profit was booked during 2017.

Following official approvals for permits, sales of units in Stage 1 of Phase 3 of the project are expected during 2018.

Completion and sales of the remaining stage of the project is expected to be completed in 2019-20.

Current measures to regulate China’s residential property market have reduced transactions in parts of the country.

However, this is not affecting pricing or demand among middle-class end-users in this attractive locality in Shanghai. We will

consider new possible opportunities in this sector.

The Group holds 50% in Super Win Limited. This comprises residential properties for leasing in Hong Kong’s Tseung Kwan

O district. The investment showed a profit for the year.

Compliance with Laws and RegulationsThe Group takes active steps to ensure compliance with all relevant laws and regulations in all jurisdictions in which it

operates, and recognizes the risks of non-compliance. It dedicates sufficient resources and personnel to ensure such

compliance, and to maintaining adequate liaison and communication with regulatory authorities. We believe that risks

attached to non-compliance are low.



Principal Risks and UncertaintiesThe Group’s principal risks are exposed to a variety of key risks including credit risk, equity price risk, insurance risk, interest

rate risk, liquidity risk, foreign exchange risk, market risk and operation risk. Details of the aforesaid key risks and mitigation

measures are elaborated in the note 37 “Financial Risk Management Objectivity and Policies” to the consolidated financial

statements of the Group in this annual report.

StakeholdersAsia Financial understands the importance of its relationships with employees, customers, suppliers, investors, regulators,

members of the communities in which we operate, and other stakeholders whose actions can affect the company’s

performance and value.

Employees

The Company recognizes the vital role that skilled and motivated staff play in its success. Our human resources policy is

therefore to encourage, recognize and reward good performance through appropriate training, appraisal and remuneration

practices. The Company is confident of its ability to attract high quality staff and believes that risks attached to over-reliance

on key personnel are moderate.

Customers

The Company’s main clients are insurance policyholders. Delivery of excellent customer service is a key reason for our

consistent underwriting profitability. Diversification of our client base and avoidance of over-dependency on core clients are

among our risk management practices.

Shareholders

The Company is committed to creating wealth for our shareholders. This aim is fundamental to all our operations and

investment activities.

Employees and Remuneration PolicyThe total number of employees of the Group for the year ended 31st

December, 2017 was 274 (2016: 308). Employees were remunerated

on the basis of their performance, experience and prevailing industry

practice. Remuneration of the employees includes salary and

discretionary bonus which is based on the Group’s results and individual

performance. Medical and retirement benefit schemes are made

available to all levels of personnel. There was no share option scheme

in operation during the year. The Group also offers various training and

induction programmes to its employees.

The remuneration policy of the Group is formulated and recommended

by the Remuneration Committee of the Company for the Board’s

approval. The Remuneration Committee’s responsibilities include

reviewing and approving the management’s remuneration proposals,

and making recommendations to the Board on the adjustments to

remuneration packages payable to directors, senior management and

employees of the Group.

Environmental, Social and Governance Report

Annual Report 201710


A. About This ReportThis Environmental, Social and Governance (“ESG”) Report captures our ESG performance during the reporting period.

The information collected during the report preparation process and disclosed in this Report will serve as the basis of the

Group’s ESG strategy, management and future improvement. This Report was prepared according to the “Environment,

Social and Governance (“ESG”) Reporting Guide”, Appendix 27 of Main Board Listing Rules of Hong Kong Exchanges and

Clearing Limited and it complied with the “comply or explain” provisions set out in the ESG reporting guide.

Unless otherwise specified, the scope and boundary of this report are the same as in the Asia Financial’s Annual Report

2017. The reporting principles of “Materiality”, “Quantitativeness”, “Balance” and “Consistency” set out in the Guide

underpinned the preparation and contents of this Report, as well as

the presentation of the information.

Asia Financial takes pride in being recognized as a “Caring Company”

for the 15th consecutive year since 2003 and in continuing to

contribute to community programmes where we can add value.

B. ESG PhilosophyAsia Financial has a strong commitment to Corporate Social Responsibility (“CSR”) in which ESG Management becomes

a tool to embed CSR concepts into every part of our operation. The Group believes this includes a duty to protect the

environment, provide a quality workplace, and serve the wider community directly and through partnerships with social

service organizations and social enterprises.

To effectively and efficiently manage various ESG aspects, we have put great effort into ensuring ESG management at

the group level. The Board has overall responsibility for decision-making regarding ESG management and reporting. The

Management monitors the performance of actual implementation and reporting process, while the Company Administration

monitors relevant trends and regulations for planning and executing CSR initiatives. We prioritize our stakeholders’ views

and recommendations through the materiality assessment. Using the above principles, the Group can better understand and

manage ESG risks and create greater value for our stakeholders.

B1. Stakeholder Engagement

Asia Financial is committed to operating in a socially responsible and transparent manner with regards to all stakeholders,

including employees, customers, shareholders, suppliers, regulatory authorities and the general community. To maintain and

develop our performance as a good corporate citizen, we aim to engage fully and openly with all stakeholders through a

diverse array of effective communication channels.



B. ESG Philosophy (cont’d)B1. Stakeholder Engagement (cont’d)

Stakeholders Communication Channels

Employees – Annual performance appraisal system

– Training, seminars and briefing sessions

– Staff communication

– Recreational and volunteer activities

Customers – Client relationship contacts

– Company website

– Online platform

– Customer service hotline

Shareholders – Annual General Meeting and other general meetings

– Investor and press conferences and briefings

– Company website

– Corporate communications including announcements, press releases, circulars, interim and

annual reports

Suppliers – Regular supplier communications and reviews

Regulators – Regular meetings and communications

– On-site review

– Compliance reports

– Training, focus groups and other events

Community – Staff volunteer activities

– Sponsorships and donations

– Meetings with NGOs

B2. Materiality Assessment

Asia Financial directly engaged with our stakeholders as part of the materiality assessment process for developing the

report. Materiality is determined by considering Asia Financial’s most significant economic, environmental, social impacts

and stakeholders’ concerns.

Based on the results of the assessment, Asia Financial will review its longer-term strategy for addressing specific

sustainability issues and explore future opportunities for improving the sustainability performance and reporting.

Several major ESG issues are listed in more detail below together with our responses to them.

Natural disasters and climate change

The insurance industry is exposed to climate-related risks (of the sort seen in 2017 with typhoon and storm surge damage

due to typhoon Hato). Asia Insurance Company, Limited (“Asia Insurance”) has increased its reinsurance protection, and is

expanding its risk analysis of insurance offerings that include climate-related risks.



B. ESG Philosophy (cont’d)B2. Materiality Assessment (cont’d)

Staff attraction, retention and succession planning

Many traditional industries face growing competition for new talent from technology and other sectors. Asia Financial is

responding with development and retention plans for interns and graduate trainees, improved job rotation, and engaging

young talents in company-wide, innovation and technology-related projects. As the average age of staff is rising, the group

is taking steps to improve succession plans. By involving staff at different levels in various company-wide initiatives, staff

engagement can be further improved and both Asia Financial and Asia Insurance can identify high potential staff as part of

the succession planning.

Cyber and data security

Owing to the growing incidence of hacking and other data security breaches, cyber and data security are top corporate

concerns world-wide, especially for companies processing customer data. Asia Insurance has given high priority to

reviewing all relevant control systems, and is taking other measures to mitigate this risk. Internal consultants and external

cyber security experts are involved in various comprehensive reviews. The management team is committed to following up

on the recommendations so as to minimize risk exposure.

C. Corporate GovernanceAsia Financial maintains a robust corporate governance structure and strictly acts in compliance with relevant laws and

regulations. Company policies and guidelines are developed to define the correct standards for all our staff in different areas,

including Codes of Conduct, Whistleblowing Policy, Anti-Money Laundering Guidelines etc. Our management team and

staff must comply with these policies. All staff should ensure that business decisions are made in the best interests of Asia

Financial. Any breach of the Codes of Conduct will be subject to disciplinary action.

A more detailed Corporate Governance Report can be found in a separate section of this annual report.

D. Working EnvironmentD1. Employment

A satisfied and motivated workforce is key to Asia Financial’s customer service, operating efficiency, creation of shareholder

value and positive contribution to the community. Our general workplace policy is to ensure:

– full compliance with all relevant legal requirements at all times;

– mutual respect on a foundation of shared interests;

– fair treatment, including an equitable, performance-linked reward system;

– equal opportunities for all individuals to reach full potential;

– working conditions conducive to good physical and mental health;

– maintenance of work-life balance.

During the year, Asia Financial fully complied with all the legal requirements regarding employment.



D. Working Environment (cont’d)D1. Employment (cont’d)

(a) Remuneration and Employee Benefits

Our policy and practices are regularly reviewed to ensure that remuneration packages are in line with market trends. This

ensures that we are competitive in attracting and retaining good quality staff. The remuneration package for staff comprises

a basic salary, year-end double pay and a discretionary bonus, the payment of which is based on both the individual’s

performance and overall performance of Asia Financial.

The Group provides insurance plans to protect employees’ livelihoods and reduce the burden of medical expenses for them.

Where appropriate, the Group makes voluntary Mandatory Provident Fund contributions to employees in addition to the

standard employer’s contributions required under the Ordinance.

(b) Balance between Work and Family Life

Asia Financial encourages a balance between work and family life. All full-time staff are expected to use all rest days, public

holidays and paid annual leave during employment. Management makes every effort to ensure that employees may take

leave at times of their choosing.

(c) Equal Employment Opportunities

We strive to ensure that every employee and job applicant is treated fairly and that no-one is disadvantaged because of

disability, gender, pregnancy, marital status, family status or race. The Group aims to create a working environment that is

free of discrimination and harassment.

In 2017, Asia Financial complied with all current laws on equal opportunities in Hong Kong, including the Sex Discrimination

Ordinance, Disability Discrimination Ordinance, Family Status Discrimination Ordinance and Race Discrimination Ordinance.

We have an Equal Employment Opportunities Policy (“EEO Policy”) in place to provide general information and guidance to

staff members on ensuring equality of opportunities and complying with the above Ordinances. The purpose of EEO Policy

is to outline the responsibilities both Asia Financial and its staff have to promoting a fair and equitable work environment. It is

the responsibility of all staff to treat their colleagues and members of the public fairly without discrimination.

We believe that it is the right of all individuals to be fairly considered for all positions within an organisation for which they

have the necessary skills and qualities, and to be treated fairly during their employment. Equal Employment Opportunities

principles apply, but are not limited to, recruitment, selection, promotion and transfers, working hours, discipline and

dismissal, compensation and benefits.




(d) Staff Profile

As of 31 December 2017, we had 274 staff, representing an 11.0% reduction in headcount compared to the previous year.

Employees by employment type (as at 31/12/2017)

Type No of Staff

Full-time 272

Part-time 2

Total 274

Our gender mix of our workforce is 37% male and 63% female. Of the 38 employees at management level, 17 are female;

four of twelve members of the Board of Directors are female.

Our employees are spread relatively evenly across all age groups, reflecting general workforce trends in Hong Kong.

Employees by age group (as at 31/12/2017)

Age No of Staff

Below 30 51

30 – 40 53

41 – 50 64

51 and above 102

Total 270*

* excluding employees in Mainland China and Taiwan

Employees by geographic location (as at 31/12/2017)

Location No of Staff

Hong Kong 235

Mainland China 1

Macau 35

Taiwan 3

Total 274




(e) Staff Turnover

For full-time staff, the turnover rate in 2017 was 11.9%. This is in line with the local pattern reported by the Hong Kong

Institute of Human Resource Management.

Turnover rate by gender

Male 5.1%

Female 6.8%

Total 11.9%

Turnover rate by age group

Age Rate

Below 30 4.7%

30 – 40 3.8%

41 – 50 2.5%

51 and above 0.9%

Total 11.9%

Note: All the above calculations on turnover rate include Hong Kong employees only.

Turnover rate by geographic location

Location Rate

Hong Kong 11.9%

Mainland China 0.0%

Macau 5.9%

Taiwan 0.0%

D2. Health and Safety

(a) Keeping Employees Safe

It is the policy of Asia Financial to take all practicable steps to ensure the health and safety of all staff at work. The aim is to

achieve health and safety standards over and above compliance with relevant statutory requirements, and zero workplace

injuries.

There was no lost work day due to zero workplace injury at Asia Financial in 2017.



D. Working Environment (cont’d)D2. Health and Safety (cont’d)

(b) Occupational Health & Safety Measures

Asia Financial implements clear measures to ensure a safe workplace. In order to minimize fire hazards, the Group has a

strict policy on proper connection and use of electrical appliances, such as sufficient capacity and correct rating. Electrical

appliance and wiring faults are the most common cause of fire in office environments, especially in the presence of

combustible materials such as carpets and curtains.

Regular training and fire drills are arranged to ensure that staff are familiar with the emergency procedures in case of a fire.

Management ensures that staff are aware of exits and emergency procedures, and that fire evacuation plans and illuminated

exit signs are properly displayed and maintained. The Group ensures that all company premises are equipped with sufficient

fire-fighting equipment such as extinguishers, hose reels, and that these are properly maintained and not obstructed.

Management promotes “good housekeeping” in order to eliminate or promptly rectify hazards such as loose cables and

folded carpets to prevent trips and falls in the office. Staff are encouraged to make use of mechanical and other aids, such

as trolleys or team lifting, to minimize risk of injury when performing manual operations like transporting heavy documents.

It is also policy to ensure that adequate first aid facilities on office premises are properly maintained, and designated

employees are appointed to look after them.

D3. Development and Training

Asia Financial’s success depends on the professionalism, skill and commitment of all our employees. Our training and

development policy is to equip staff to competently and effectively undertake all assignments, to develop their skills in order

to realize their own personal potential, and to acquire our corporate culture and values.



D. Working Environment (cont’d)D3. Development and Training (cont’d)

Apart from providing seminars and training courses, Asia Financial also offers training and education allowances as an

incentive for employees to advance their academic qualifications and professional skills in the mutual interests of the

employee and the Company. Training statistics for the year 2017 are as follows.

0

20

40

60

80

100

0

5

10

0

10

20

30

40

0

20

40

60

80

100

64.9%

8.56

26.5

15.2

8.48

76.6%

91.4%85.2%

62.3%

71.9%71.9%

8.53

2.5

Percentage of employees trained by gender

%trained

Male staff Female staff Overall %

Male staff Female staff Overall

Average No.of hours

Average No.of hours

Senior Management

Middle Management

General Staff

Percentage of employees trained by employee category

%trained

Senior Management

Middle Management

General Staff Overall %

Average training hours completedper employee by gender

Average training hours completed per employee by employee category

Note: All the above training statistics include Hong Kong employees only.



D. Working Environment (cont’d)D4. Labour StandardsAs part of the financial services industry, Asia Financial sees little or no risk of potential involvement in or exposure to

child, forced or compulsory labour. However, we are aware of the need to be in compliance with laws and regulations and

community expectations concerning these issues in our operations.

Management believes its recruitment procedures are more than adequate to prevent child or forced labour. All such

procedures involve a stringent monitoring process to verify a candidate’s personal information in order to avoid

misrepresentation and any form of forced labour. An official employment contract clearly states relevant terms and

conditions, and each individual is well briefed and duly assigned.

The Group is totally committed to complying with the Employment Ordinance and associated guidelines. Our Internal Audit

team includes compliance in this area in its regular reviews of employment conditions in our operations in all locations. If

it is discovered that these labour standards have been breached, such employment will be discontinued immediately and

parents, guardians or relevant authorities will be immediately notified.

E. EnvironmentalAsia Financial’s business does not involve significant generation of emissions or pollutants, or the use of resources such

as energy, water, raw and packaging materials. However, we strive to be a pioneer in environmental best practices and in

complying with regulatory requirements – and exceeding them wherever possible. We have active strategies to manage our

carbon footprint and use resources efficiently and reduce waste in our business operations.

As a result of organic growth, total revenue of Asia Financial reached HK$1,294.3 million in 2017, an increase of 61.9% over

the base year 2009. Although the increase in business activities inevitably increased some categories of carbon emission,

we were able to reduce overall greenhouse gas emissions from 975 to 808.97 tonnes of CO2-e during 2009-17.

Note: All the reported data on environmental performance include the Hong Kong operations of Asia Financial Holdings Limited and its

wholly-owned subsidiary, Asia Insurance Company, Limited.



E. Environmental (cont’d)E1. Emissions

(a) Carbon Footprint Management Strategy

Asia Financial has been continuously measuring its emission profile since 2009. With the help of an external consultant,

company vehicle information and the unleaded petrol consumption data, electricity consumption, paper consumption and

recycling, and overseas business trips records are used to calculate carbon emissions according to international standards.

By identifying these sources of emission, we can adopt plans to reduce carbon emissions; as a result, our carbon footprint

has decreased despite continuous business growth over the past several years. We are also able to quantify savings in

operational costs. The emission data for the year 2017 are as follows:

Greenhouse Gas (“GHG”) Emissions Total (tonnes CO2 equivalent)

Scope 1: Unleaded petrol & gas oil combustion 124.41

Scope 2: Purchased electricity 603.62

Scope 3: Overseas business travel, paper waste 80.94

Total 808.97

GHG Emissions Intensity

GHG Emissions (tonnes CO2 equivalent) 808.97

Business Turnover in 2017 (“HK$ million) 1,294.3

Intensity per HK$ million turnover 0.63 tonnes

Types of Emissions and Respective Emission Data

Nitrogen Oxides (“NOx”) emissions mainly from company cars 17,975g

Sulphur Oxides (“SOx”) emissions mainly from company cars 524g

Particulate Matter (“PM”) emissions mainly from company cars 1,323g

Notes to Types of Emissions and Respective Emission Data:

1. The source of the emissions is mainly from our company cars while our business operations have minimal effects.

2. All the above calculations are based on the emission factors listed in Appendix 2 Reporting Guide on Environmental KPIs of “How to

prepare an ESG Report” issued by Hong Kong Exchanges and Clearing Limited.



E. Environmental (cont’d)E1. Emissions (cont’d)

(b) Measures regarding hazardous and non-hazardous wastes

Total hazardous and non-hazardous waste produced

Hazardous waste Hazardous waste is minimal due to the nature of our business operations.

Non-hazardous waste Our Non-hazardous waste mainly comes from disposal of paper waste at landfills: 21.85

tonnes CO2 equivalent.

Intensity per staff = 0.092 tonnes CO2 equivalent

We take the following measures to further minimize waste:

– Professional vendors collect ink cartridges of copiers and printers.

– Professional specialist firms collect paper for recycling.

Percentage with recycled content = 60.7%

Total paper recycling = 14,521 kg

(c) Measures to mitigate emissions

c1. Staff engagement

Employee participation is essential to our green office policies. These include a “Switch-off” policy for all idle equipment,

encouragement for staff to switch off computers and monitors at the end of the working day and all electrical appliances off

(or, where appropriate, on to energy-saving mode) when not in use.

c2. Use of energy efficient lighting & equipment

Since 2009, Asia Financial has replaced T8 fluorescent lamps with T5 fluorescent lamps, and 12V50W spotlights with 3W

LED spotlights in all its local offices. This resulted in an 11.5% reduction in carbon emissions through electricity used during

2009-17.



E. Environmental (cont’d)E1. Emissions (cont’d)

(c) Measures to mitigate emissions (cont’d)

c3. Other environmental practices

We have also adopted the following to reduce carbon emissions.

Level of of�ce lighting is less than 500 lux

Multi-function photocopiers with printing, scanning and fax functions widely adopted

Policy to encourage staff to take the most cost-effective travelling method

Paper certi�ed by Forest Stewardship Council (“FSC”) widely used

Paper recycling

Maximum use of natural light in of�ces“Order less Waste

less” to reduce food waste at company functions

Security printing widely adopted to prevent misprinting

Energy saving mode and power management setting activated for computer monitors

Computers with energy labels widely adopted

E2. Use of Resources

Asia Financial’s business does not involve significant use of such resources as energy, water, raw and packaging materials.

However, we are committed to using resources efficiently and reducing waste within our business operations.

Disclosures on Use of Resources for 2017

Direct and indirect energy consumption by type (e.g.

electricity, gas or oil) and intensity

• Total and electricity consumption = 718,585 kWh

• Total unleaded petrol consumption = 35,643 Litres

• Total gas oil consumption = 10,300 Litres

• Energy consumption intensity = 3.07 tonnes CO2 equivalent

per staff

Water consumption in total and intensity Data unavailable as business premises are located in buildings

with centralized water metering.

Total packaging material used for finished goods Not applicable.



E. Environmental (cont’d)E3. The Environment and Natural Resources

Although our business activities do not have significant impact on the environment and natural resources, our commitment

to sustainability has resulted in:

– A 11.5% reduction in carbon emissions through electricity in 2009-17.

– Paper waste sent to landfill reduced from 20,536kg in 2009 to 9,381kg in 2017.

We are proud to have received the following recognition for our efforts in improving the quality of life for both present and

future generations.

Asia Insurance – The First Carbon-neutral Insurance Company in Greater China

In 2009, our wholly-owned subsidiary, Asia Insurance became the first carbon-neutral

insurance company in Greater China. Asia Insurance offsets all its emissions – thus

becoming carbon-neutral – by sponsoring an afforestation and reforestation project on

degraded lands in Sichuan, China.

Asia Financial – Green Office Award Label

Asia Financial has been awarded the Green Office Award Label by the World Green Organization since 2014.

F. OperationsF1. Supply Chain Management

Asia Financial fully considers environmental and social standards in its sourcing and procurement activities. Our ethics and

values inform all our interactions with suppliers, contractors and service partners.

All suppliers of furniture, equipment, stationery and other office items to Asia Financial are local. We expect suppliers and

their supply chain to comply fully with all applicable laws and regulations in the conduct of their business. It is our practice

to identify, assess and monitor supplier practices with regard to human and labor rights, the environment, health and safety,

and anti-corruption principles. Where practical, we also work with our vendors to encourage the utilization of responsibly and

sustainably produced goods and services.



F. Operations (cont’d)F2. Service Quality

For our insurance business, operations strictly comply with the Companies Ordinance and regulations of the Insurance

Authority. Our Internal Audit team will conduct periodic checks to make sure the quality of service and the terms of the

insurance contracts are properly arranged.

Due to the nature of the insurance business, there are no recall procedures for our products. If customers are dissatisfied

with our service or the terms of the insurance contract, our staff are more than willing to make the necessary adjustment.

During 2017, two customer complaints were made concerning the products and services provided by Asia Insurance. These

were very carefully assessed and handled by the Compliant Officer with the customers concerned and were satisfactorily

settled.

F3. Intellectual Rights

Our intellectual property policy includes copyright, patents and trademarks. The policy reflects the current laws in Hong

Kong relating to intellectual property and will be subject to review from time to time to ensure compliance. The major

exposure of our business operation in the area mainly includes the design of our marketing materials and the use of

computer software. We have implemented the following measures to minimize the risks.

1. All marketing areas are centrally processed and approved by Administration Department to avoid infringement on

intellectual property rights.

2. According to our Policy against Illegal and Unlicensed Computer Software, employees are prohibited to install

computer software onto any information technology equipment within the premises of the Group. Duplication of

licensed software for backup purpose is also prohibited unless additional license is granted.

F4. Personal Data (Privacy) Policies

Asia Financial is committed to adopting and complying with all relevant provisions of the Personal Data (Privacy) Ordinance,

Chapter 486, the Laws of Hong Kong (the “Ordinance”). The Group upholds the personal data privacy protection principles

stated in Schedule 1 of the Ordinance for the purposes of collecting, retaining, processing and using personal data. We

have also designated a Data Protection Officer for monitoring compliance with the Ordinance. While heads of departments

are in direct control of personal data, the Data Protection Officer also offers assistance on the relevant compliance issues. In

addition, our Internal Audit Department will conduct regular checks to ensure compliance with all regulations.



F. Operations (cont’d)F5. Anti-corruption

Asia Financial is committed to combating corruption, money laundering, extortion, fraud and other financial crimes and

complying fully with all applicable laws and regulations.

With respect to Asia Financial’s clients or counterparties, the company reserves the right to terminate immediately any

business relationship that violates or presents the risk of violating such laws, regulations or policies of the company.

Asia Financial maintains written policies, procedures and internal controls designed to comply with the relevant laws. These

include a risk assessment process, education and training, review and approval processes, due diligence procedures,

accounting processes and independent testing processes. Personnel who engage in or facilitate bribery, or who fail to

comply with all applicable laws and regulations, and our related policies, may be subject to disciplinary action.

No concluded legal cases regarding corrupt practices were brought against the Group or its employees during the year

2017.

F6. Preventive Measures & Whistle-blowing

Asia Financial is committed to achieving and maintaining the highest standards of openness, probity and accountability.

Employees at all levels are expected to conduct themselves with integrity, impartiality and honesty. Employees are

encouraged to raise concerns about any suspected misconduct or malpractice within the Group, without fear of victimization

or harassment, in a responsible and effective manner, rather than overlooking a problem or blowing the whistle outside.

Asia Financial has a whistleblowing policy to achieve the above corporate governance target. The Policy applies to

employees (permanent or temporary) at all levels of the Group.

Whistleblowing matters may include but not confined to:

– a criminal offence;

– a failure to comply with any legal obligations;

– a miscarriage of justice;

– a financial impropriety;

– an action which endangers the health and safety of an individual;

– an action which causes damages to the environment;

– the deliberate concealment of information concerning any of the matters listed above.

If Asia Financial discovers any incident of corruption, money laundering, extortion, fraud and other financial crimes, legal

or disciplinary actions will be taken to protect the interests of the Company and its stakeholders. The Audit Committee

of the Company has overall responsibility for overseeing, monitoring and reviewing the operation of the policy and

recommendations for actions resulting from investigations while day-to-day responsibility is assigned to the President of the

Group.



G. CommunityAs a responsible corporate citizen, commitment to the wider community is a core part of Asia Financial’s culture. We aim to

make a positive difference to society through donation, partnerships with social enterprises and staff voluntary activities with

a wide range of beneficiaries.

G1. Donation & Sponsorship

At the end of 2009, we founded AFH Charitable Foundation Limited (“the Foundation”) to collect funds and target donations

to help meet charitable, educational, cultural and other needs of society.

In 2017, Asia Financial, Asia Insurance and the Foundation devoted financial resources (mainly through donations and

sponsorships) by supporting non-profit-making organizations locally and overseas with a total amount of HK$8.73 million.

32.9%

49.0%

18.1%

EducationDonation to NGOs/CharitiesOthers

Distribution of donation & sponsorship made in 2017

G2. Community Involvement – Partnership with Social Enterprises

We invest in SVHK Capital Limited (“SVHK”), a venture philanthropic organization aiming

to provide financial and non-financial support to social-purpose organizations or social

enterprises in Hong Kong. The flagship projects of SVHK are Light Be (Social Realty)

Limited (“Light Be”), Diamond Cab (Hong Kong) Limited (“Diamond Cab”), Dialogue in the

Dark Limited and Fullness Hair Salons.



G. Community (cont’d)G2. Community Involvement – Partnership with Social Enterprises (cont’d)

“Light Be” helps needy find a room of their own – for cheap

“Light Rooms” is a project of Light Be and offers the needy an alternative to the poor environment of “sub-divided” flats.

Specifically, “Light Rooms” encourages private property owners to rent units at an affordable rate or below market prices to

underprivileged single-parent families with urgent housing needs. “Light Rooms” provides 3-bedroom flats for three single-

parent families who share the dining room, kitchen and washroom. It brings back self-esteem to the families, who are

encouraged to live and share together and build up a supportive neighbourhood.

Interested property owners are welcome to join the project.

Hotline：+852 2806 1911

Website：http://www.lightbe.hk

Diamond Cab – Barrier-free Taxi Service

This is a social venture providing point-to-point transportation services for wheelchair users. It provides not only

unprecedented wheelchair-accessible and barrier-free taxi services, but top quality standards of professional transportation

for people in need. This taxi service has been receiving an overwhelming response from the general public.

Diamond Cab (Hong Kong) Limited provides

point-to-point transportation services

for wheelchair users.

Hotline: +852 2760 8771

Website: www.diamondcab.com.hk



G. Community (cont’d)G3. Community Involvement – Staff Volunteering

We organize a series of volunteering programmes every year to reflect the importance of community life to us on both

individual and corporate levels; these activities extend beyond the provision of financial sponsorship to organizations. At the

heart of these efforts is the voluntary work undertaken by individual members of staff within our local communities. With the

cooperation of Evangelical Lutheran Church Social Service – Hong Kong and the Tung Wah Group of Hospitals, we arranged

several activities in 2017 to bring love and care to children and senior citizens.

Volunteer Service Statistics for 2017

Total number of volunteers 105

Total service hours 575

H. ConclusionThis report shows Asia Financial’s ongoing efforts in areas such as workplace equality, carbon footprint management,

promotion of ethical business practices and community involvement. Like our business environment, the community of

which we are a part is constantly growing and changing. Our environmental, social and governance commitments will

therefore continue to evolve and adapt to new conditions. As with our traditional financial indicators, we will continue to

monitor and enhance our ESG performance as a core function of corporate management.

Corporate Governance Report



Corporate Governance PracticesThe Company is committed to maintaining high standards of corporate governance. The board of directors (the “Board”)

believes that good corporate governance provides a framework that is essential for effective management, successful

business growth and a healthy corporate culture, thereby leading to promote investor confidence and safeguard the interests

of shareholders, investors, customers, staff and other stakeholders.

The Board has applied with the principles set out in the Corporate Governance Code (the “CG Code”) contained in Appendix

14 of the Rules Governing the Listing of Securities (the “Listing Rules”) on The Stock Exchange of Hong Kong Limited

(the “Stock Exchange”) and has adopted various measures to ensure that a high standard of corporate governance is

maintained.

The Company has complied with all the applicable code provisions set out in the CG Code throughout the year ended 31st

December, 2017, except for the deviation as specified and explained below with considered reasons for such deviation:

Code provision A.6.7 provides that independent non-execute directors and other non-executive directors should attend

general meetings. Mr. SOPHONPANICH Choedchu, being the then non-executive director, was unable to attend the 2017

Annual General Meeting (“2017 AGM”) of the Company held on 24th May, 2017 due to health reason. Dr. WONG Yu Hong

Philip, being the then independent non-executive director, was not able to join the 2017 AGM as he was out-of-town for his

other commitment.

Directors’ Securities TransactionsThe Company has adopted a code for securities transactions by directors (the “Code of Conduct”) on terms no less exacting

than the required standard in the Model Code for Securities Transactions by Directors of Listed Issuers (the “Model Code”)

as set out in Appendix 10 to the Listing Rules.

The Company has made specific enquiry of all directors and all directors have confirmed that they have complied with the

required standard as set out in the Code of Conduct and the Model Code throughout the year ended 31st December, 2017.

Board of DirectorsBoard Composition

The Board currently comprises 12 members, consisting of 4 executive directors (including the Chairman and the President),

4 non-executive directors (“NEDs”) and 4 independent non-executive directors (“INEDs”). NEDs and INEDs provide the

Group with a wide range of expertise and experience as well as checks and balances to safeguard the interests of the

shareholders. Members of the Board, who come from a variety of different backgrounds, have a diverse range of business

and professional expertise. The biographical details of the directors and the relationship among them are set out in pages

52 to 56 of this annual report. The updated list of directors of the Company identifying their roles and functions and whether

they are INEDs is available on the websites of the Company and the Stock Exchange. INEDs are also identified as such in all

corporate communications that disclose the names of directors of the Company.



Board of Directors (cont’d)Board Composition (cont’d)

The Board has adopted a Board Diversity Policy which is published on the Company’s website. The policy sets out the

Company’s approach to achieve diversity at Board level. Board appointments are based on merit and candidates are

considered against objective criteria, having due regard for the benefits of diversity on the Board including, but not limited

to, gender, age, cultural and educational background, professional experience, skills, knowledge, length of services and also

other factors based on its business model and specific needs.

An analysis of the Board’s current composition as at 31st December, 2017 is as follows:

Number of Directors

Designation ED 4 33.3%

NED 4 33.3%

INED 4 33.3%

Gender Male 8 66.7%

Female 4 33.3%

Age group 81 or over 1 8.3%

71-80 2 16.7%

61-70 5 41.7%

51-60 4 33.3%

Nationality Chinese 8 66.7%

Non-Chinese 4 33.3%

Directorship with Asia Financial (years) Over 20 2 16.6%

10-19 5 41.7%

1-9 5 41.7%

Other listed company directorships 4 2 16.7%

2 2 16.7%

1 1 8.3%

0 7 58.3%

Induction for Directors

Every Board member receives a package of orientation materials on key areas of business operations and practices of the

Company, as well as a copy of the Director’s Handbook upon joining the Board. The Director’s Handbook sets out, among

other things, the general and specific duties of the directors and the terms of reference of various Board committees.

The Director’s Handbook is updated from time to time to reflect developments and latest changes in the commercial and

regulatory environment in which the Group conducts its businesses.



Board of Directors (cont’d)Appointment and Re-election of Directors

The Company has a formal procedure for the appointment of new directors. Any proposed appointment will be first reviewed

by the Nomination Committee. Upon recommendation by the Nomination Committee, the proposed appointment will then

be reviewed by the Board and, if thought fit, approved by the Board or by shareholders in any general meeting.

All directors are subject to retirement by rotation at least once every three years. Retiring directors are eligible for re-election

at each annual general meeting (“AGM”) in accordance with the Bye-laws of the Company. Any new director appointed

to fill a casual vacancy or as an addition to the Board shall hold office only until the next following general meeting of the

Company and shall then be eligible for re-election.

During the year 2017, the Board appointed Mrs. SHUEN LEUNG Lai Sheung Loretta and Mr. SOPHONPANICH Chote as

INED and NED respectively so that they shall hold office only until the next following annual general meeting of the Company

to be held on 16th May 2018 and shall be eligible for re-election at that meeting.

Role and Function of the Board

The Board is empowered to manage and conduct the businesses and affairs of the Group and is responsible for determining

the Group’s overall corporate objectives, business strategies and operational policies. The Board monitors the Group’s

financial performance, maintains effective oversight over the management, risks assessment, controls over business

operations and ensures the Group’s operations are conducted prudently and complied with specific corporate governance

requirements and appropriate framework of laws and regulatory guidelines.

Chairman and President

The Company has appointed a President instead of a Chief Executive Officer. The roles of the Chairman and the President

are segregated. Dr. CHAN Yau Hing Robin, the executive Chairman is responsible for the leadership and effective running of

the Board. Mr. CHAN Bernard Charnwut, also an executive director, is the President of the Company and he is responsible

for the overall strategic planning and the day-to-day management of the Group. Their respective roles and responsibilities

are set out in writing, which have been approved and adopted by the Board.

Non-executive Directors and Independent Non-executive Directors

All NEDs and INEDs do not actively involve in the day-to-day management of the Company. They, however, do play an

important role in bringing their independent judgement, considerable knowledge and diverse expertise to the Board’s

deliberations.

Each NED (including INED) of the Company has received a letter of appointment from the Company for a specific term of 2

years and is subject to retirement by rotation and eligible for re-election at the AGM in accordance with the Company’s Bye-

laws.

The Company was non-compliance with appointment of INEDs representing at least one-third of the Board as required

under Rule 3.10A of the Listing Rules due to the resignation of Mr. SIAO Chi Lam Kenneth on 10th August, 2017. After the

appointment of Mrs. SHUEN LEUNG Lai Sheung Loretta as an INED on 16th August, 2017, the Company has 4 INEDs

which fulfilled the requirement under Rule 3.10A of the Listing Rules for having the INEDs of the Company representing at

least one-third of the Board.



Board of Directors (cont’d)Non-executive Directors and Independent Non-executive Directors (cont’d)

Save as disclosed above, the Board at all times has more than one-third of the members of the Board consist of INEDs and

at least one of whom has appropriate professional qualifications or accounting or related financial management expertise.

The Company has received from each of the INEDs an annual written confirmation of his/her independence for the year

ended 31st December, 2017. The independence of the INEDs has been assessed in accordance with the criteria as set

out in Rule 3.13 of the Listing Rules. Following such assessment, the Board has affirmed that all the INEDs continue to be

independent.

Board Meetings

The Board meets regularly, and at least four times a year, to review business development and performance of the Group

and additional meetings will be held as and when required. Directors have full access to information on the Group and

may, in appropriate circumstances, take independent professional advice at the Company’s expense. The schedule of

Board meetings for a year is planned in the preceding year and such schedule is made available to all directors to facilitate

directors’ attendance at the meetings. Directors receive written notice of each regular Board meeting at least 14 days in

advance and they are given an opportunity to include matters in meeting agenda. The Company Secretary assists the Board

in preparing the agenda for meetings. Directors receive the meeting agenda and accompanying Board papers at least 3

days before the date of Board meeting so that the directors have the time to review the documents. Minutes of every Board

meeting are circulated to all directors for their perusal prior to confirmation of the minutes at the following Board meeting.

Minutes of Board meetings are kept by the Company Secretary and are open for inspection by directors.

Directors make their best efforts to contribute to the development of strategy, policies and decision-making by attending the

Board meetings in person or via telephone conferencing.

During the year 2017, the Board held four scheduled meetings to discuss the business development and strategies of the

Group; approve the Group’s annual business forecast; review and receive financial and business updates with information

on the Company’s latest financial and operational performance; review the internal control systems and risk management

functions; approve the interim and annual results of the Group and the release to the public; approve interim dividend

payment; recommend final dividend for shareholders’ approval; review and receive reports from the respective Board

committees; approve the audit fees; approve new appointment of directors and the re-appointment of the retired board

committees’ members; set up the Risk Committee with the adoption of its terms of reference; and approve the revised terms

of reference of the Compliance Committee and the updated Risk Management Policy in compliance with relevant legal and

regulatory requirements.

Other than regular Board meetings, the Chairman also held a meeting with the NEDs and INEDs without the presence of the

other executive directors. The meeting aimed at having an open discussion among the NEDs and INEDs on issues relating to

the Group. The Board also annually reviewed the time commitment in other appointments or offices held in public companies

or organisations required from the directors proposed to be re-elected at each AGM of the Company.



Board of Directors (cont’d)Attendance Records of Directors

The attendance records of four scheduled Board meetings held in 2017 and the 2017 AGM of the Company are set out

below:

Name of director Board meetings 2017 AGM

Executive Directors:

CHAN Yau Hing Robin (Chairman) 4/4 1/1

CHAN Bernard Charnwut (President) 4/4 1/1

TAN Stephen 4/4 1/1

WONG Kok Ho 4/4 1/1

NEDs:

SOPHONPANICH Choedchu* 0/2 0/1

SOPHONPANICH Chote^ 0/0 0/0

CHAN Yeow Toh 4/4 1/1

TANAKA Junichi 4/4 1/1

YAMAMOTO Takao 4/4 1/1

INEDs:

CHOW Suk Han Anna 4/4 1/1

MA Andrew Chiu Cheung 4/4 1/1

SIAO Chi Lam Kenneth# 2/2 1/1

WONG Yu Hong Philip* 0/2 0/1

LAI KO Wing Yee Rebecca 4/4 1/1

SHUEN LEUNG Lai Sheung Loretta** 1/1 1/1

* Resigned on 9th June, 2017^ Appointed on 6th December, 2017# Resigned on 10th August, 2017

** Appointed on 16th August, 2017

Liability Insurance for Directors

The Company has arranged appropriate insurance coverage on directors’ and officers’ liabilities against possibility of legal

action to be taken against the Directors and the senior executives. In year 2017, no claim under the insurance policy was

made.

Directors’ Training

All directors are required to keep abreast of the responsibilities as a director, and of the conduct and business activities of

the Company. During the year, all directors were provided with the monthly management accounts of the Group as well as

regular updates on applicable legal and regulatory requirements. Directors are also encouraged to participate in continuous

professional development to develop and refresh their knowledge and skills.

In year 2017, the Company organised an in-house seminar on the topic of “Hong Kong Risk Based Capital” conducted by a

professional body for directors at the Company’s expense. Written materials of the seminar were provided to the participated

directors for reading and reference. Apart from what the Company had arranged, some of the directors also attended other

external training seminars.



Board of Directors (cont’d)Directors’ Training (cont’d)

According to the records provided by all directors, which had been reviewed by the Compliance Committee in March 2018,

the training received by the directors during the year ended 31st December, 2017 is summarized as follows:

• Dr. CHAN Yau Hing Robin, Mr. CHAN Bernard Charnwut, Mr. TAN Stephen, Mr. WONG Kok Ho, Ms. CHAN Yeow

Toh, Mr. YAMAMOTO Takao, Ms. CHOW Suk Han Anna, Mr. MA Andrew Chiu Cheung, Mrs. LAI KO Wing Yee

Rebecca and Mrs. SHUEN LEUNG Lai Sheung Loretta participated in the in-house seminar.

• Dr. CHAN Yau Hing Robin, Mr. CHAN Bernard Charnwut, Mr. TAN Stephen, Mr. SOPHONPANICH Chote, Ms. CHOW

Suk Han Anna, Mr. MA Andrew Chiu Cheung, Mrs. LAI KO Wing Yee Rebecca and Mrs. SHUEN LEUNG Lai Sheung

Loretta also attended some other seminars organised by professional bodies or other listed companies.

• Mr. TANAKA Junichi was not able to attend the aforesaid in-house seminar.

Delegation by the BoardBoard Committees

The Board has set up several board committees including the Executive Committee, the Remuneration Committee, the

Nomination Committee, the Compliance Committee and the Audit Committee to assist it in carrying out its responsibilities.

The Board also established a Risk Committee on 16th August, 2017 to oversee and manage all identified risks on an

ongoing basis.

Each of these board committees has its specific written terms of reference which set out in detail their respective authorities

and responsibilities. All these board committees, except the Executive Committee, comprise a majority of INEDs.

Executive Committee

The Board has delegated the day-to-day management of the Company’s business to the Executive Committee which

consists of all 4 executive directors of the Company. The Executive Committee usually meets once a month with the Group’s

senior executives and is responsible for formulating the policies of the Group on major strategic, financial, regulatory, risk

management, commercial and operational issues for the Board’s consideration; implementing policies as determined by the

Board and monitoring the operational and financial performance of the Group.

In year 2017, the Executive Committee held nine meetings and the attendance record of each executive director is set out

below:

Name of executive director

Number of meetings

attended/held

Attendance

rate

CHAN Yau Hing Robin (Chairman) 9/9 100%

CHAN Bernard Charnwut (President) 6/9 67%

TAN Stephen 9/9 100%

WONG Kok Ho 9/9 100%



Delegation by the Board (cont’d)Remuneration Committee

The Remuneration Committee was set up with specific terms of reference which are available on the websites of the

Company and the Stock Exchange. The Remuneration Committee comprises 5 members, four of whom are INEDs. The

Remuneration Committee meets at least once each year with the Company’s Head of Human Resources and reports to the

Board on their decisions or recommendations following each meeting.

The Remuneration Committee is responsible for considering and making recommendations to the Board on the Company’s

remuneration policy and for the formulation and review of the remuneration packages of all the directors, Board committees’

members and senior executives of the Group. The Remuneration Committee may seek advice from external professional

advisors for market data of executive remuneration and other remuneration related issues if required.

In year 2017, the Remuneration Committee held one meeting. The attendance record of each member is set out below:

Name of member

Number of meeting

attended/held

Attendance

rate

LAI KO Wing Yee Rebecca (Chairperson) 1/1 100%

CHOW Suk Han Anna 1/1 100%

MA Andrew Chiu Cheung 1/1 100%

SHUEN LEUNG Lai Sheung Loretta** 0/0 N/A

CHAN Bernard Charnwut 1/1 100%


During the year 2017, the Remuneration Committee had performed the following works:

• reviewed and recommended for approval by the Board the annual salary review, the emolument of the executive

directors and allocation of discretionary bonus;

• reviewed and recommended the directors’ fees and board committees’ members’ fees for the Board’s endorsement

subject to the shareholders’ approval at the 2017 AGM of the Company;

• reviewed and recommended for approval by the Board the re-appointment of retired member of the Remuneration

Committee; and

• submitted a summary report on the resolved issues and recommendations to the Board.



Delegation by the Board (cont’d)Nomination Committee

The Nomination Committee was set up with specific terms of reference which are available on the websites of the Company

and the Stock Exchange. The Nomination Committee comprises 5 members, four of whom are INEDs. The Nomination

Committee meets at least once each year and reports to the Board on their decisions or recommendations following each

meeting.

The Nomination Committee is responsible for making recommendations to the Board on nominations, appointments and

re-appointments of directors in accordance with the Company’s Nomination Policy. The Nomination Committee considers

and reviews, among other things, the structure, size and composition of the Board, the balance of skills, knowledge and

experience of the candidates, independence of INEDs, re-election of retiring directors, term of appointment of NEDs and

the membership of respective board committees. The Nomination Committee is also responsible for reviewing the Board

Diversity Policy to ensure its effectiveness. The Nomination Committee may seek independent professional advice, at the

Company’s expense, to perform its responsibilities.

In year 2017, the Nomination Committee held four meetings. The attendance record of each member is set out below:

Name of member

Number of meeting

attended/held

Attendance

rate

CHOW Suk Han Anna (Chairperson) 4/4 100%


LAI KO Wing Yee Rebecca 4/4 100%

SHUEN LEUNG Lai Sheung Loretta** 1/1 100%



During the year 2017, the Nomination Committee had performed the following works:

• reviewed, assessed and confirmed the independence of all the INEDs;

• nominated directors who are required to retire from office by rotation to stand for re-election by shareholders at the

Company’s 2017 AGM;

• reviewed the structure, size, composition and diversity of the Board;

• reviewed and recommended for the Board’s approval the re-appointments of retired members of certain board

committees;

• reviewed and recommended the nomination of two candidates as the Chief Compliance Officer and the Chief Risk

Officer of the Group;

• reviewed and recommended the nomination of Mrs. SHUEN LEUNG Lai Sheung Loretta as an INED;

• reviewed and recommended the nomination of Mr. SOPHONPANICH Chote as a NED; and

• submitted summary reports on the resolved issues and recommendations to the Board.



Delegation by the Board (cont’d)Compliance Committee

The Compliance Committee was set up with specific terms of reference which are available on the websites of the Company

and the Stock Exchange. The Compliance Committee comprises 6 members, four of whom are INEDs. The Compliance

Committee meets at least twice each year and reports to the Board on their decisions or recommendations following each

meeting.

The Compliance Committee is responsible for reviewing and monitoring the Company’s policies and practices on

compliance with legal and regulatory requirements. The Board has delegated the responsibility of overseeing the corporate

governance functions to the Compliance Committee to ensure that the Company implements sound corporate governance

practices and procedures.

In year 2017, the Compliance Committee held three meetings. The attendance record of each member is set out below:

Name of member

Number of meeting

attended/held

Attendance

rate

CHOW Suk Han Anna (Chairperson) 3/3 100%


SIAO Chi Lam Kenneth# 1/1 100%



TAN Stephen 3/3 100%


# Resigned on 10th August, 2017


During the year 2017, the Compliance Committee had performed the following works:

• reviewed and monitored the reports and works done by Internal Audit and Compliance Department on the Group’s

compliance with legal and regulatory requirements;

• reviewed and approved the revised Terms of Reference of the Compliance Committee for the Board’s endorsement;

• reviewed the Company’s compliance with the CG Code and disclosure in the Corporate Governance Report;

• reviewed the Company’s compliance with the Environmental, Social and Governance (“ESG”) Reporting Guide and

disclosure in the ESG Report;

• reviewed the training records of all the directors and the Company Secretary;

• reviewed the complaint cases by the complaint officer of Asia Insurance;

• reviewed and recommended for the Board’s approval the re-appointment of retired member of the Compliance

Committee;



Delegation by the Board (cont’d)Compliance Committee (cont’d)

• reviewed the works done by the Chief Compliance Officer;

• submitted compliance reports to the Audit Committee; and

• submitted summary reports to the Board on the resolved issues and recommendations.

Audit Committee

The Audit Committee was set up with specific terms of reference which are available on the websites of the Company and

the Stock Exchange. All four members of the Audit Committee are INEDs. The Audit Committee meets at least three times

each year and has a separate meeting with the external auditors in the absence of management to discuss any audit issues.

The Audit Committee is responsible for reviewing, among other things, the Group’s financial reporting, the nature and scope

of audit, the effectiveness of the systems of internal control and risk management, and compliance relating to financial

reporting. The Audit Committee is also responsible for making recommendations to the Board on the appointment, re-

appointment, removal and remuneration of the Group’s external auditors. The Audit Committee reports to the Board

following each Audit Committee meeting, drawing the Board’s attention to significant issues or matters of which the Board

should be aware of, identifying any matters in respect of which it considers that action or improvement is needed, and make

relevant recommendations.

The Audit Committee has the overall responsibility for overseeing, monitoring and reviewing the operation of the Company’s

Whistleblowing Policy. This policy is devised to provide a channel through which all staff members may report incidents of

improprieties in a secured and confidential manner such that reporting employees are assured of protection against unfair

dismissal, victimization or unwarranted disciplinary actions if they acted in good faith and exercised due care.

In year 2017, the Audit Committee held three meetings. The attendance record of each member is set out below:

Name of member

Number of meeting

attended/held

Attendance

rate

MA Andrew Chiu Cheung (Chairman) 3/3 100%

SIAO Chi Lam Kenneth# 1/1 100%




# Resigned on 10th August, 2017




Delegation by the Board (cont’d)Audit Committee (cont’d)

During the year 2017, the Audit Committee had performed the following works:

• reviewed the Group’s interim and annual financial statements with respect to their truth and fairness, and agreed with

the external auditors’ work;

• reviewed the changes in accounting standards and their impacts on the Group’s financial statements;

• reviewed the report from the external auditors;

• reviewed and recommended for approval by the Board the audit fees payable to the external auditors;

• reviewed and approved the internal audit co-sourcing arrangement with external consultant and recommended for

approval by the Board the professional fee payable to the external consultant;

• reviewed and approved the Group’s internal and external audit plans;

• reviewed the effectiveness of the Group’s internal control systems covering the controls for financial, operational,

compliance and risk management;

• reviewed the reports on internal audit findings and recommendations of both the internal auditor and the external

consultant and the responses from the management;

• submitted summary reports on the resolved internal audit issues and internal control recommendations to the Board;

• reviewed the compliance reports from the Compliance Committee to monitor the Group’s compliance with regulatory

and statutory requirements;

• reviewed and recommended for the Board’s approval of the re-appointment of retired member of the Audit

Committee; and

• reviewed the independence and objectivity of the external auditors and recommended for the Board’s endorsement

the re-appointment of the external auditors subject to the shareholders’ approval at the Company’s 2017 AGM.

Risk Committee

The Risk Committee was set up during the year with specific terms of reference which are available on the websites of

the Company and the Stock Exchange. The Risk Committee comprises 5 members, four of whom are INEDs. The Risk

Committee meets at least two times each year and reports to the Board on their decisions or recommendations following

each meeting.

The Risk Committee is responsible for assisting the Board to oversee the effectiveness of the Group’s risk management

system and framework, to review and develop risk management policy, manual and guideline, and to advise the Board on

the appropriateness and effectiveness of risk controls and mitigation tools.



Delegation by the Board (cont’d)Risk Committee (cont’d)

In year 2017, the Risk Committee held one meeting. The attendance record of each member is set out below:

Name of member

Number of meeting

attended/held

Attendance

rate

LAI KO Wing Yee Rebecca (Chairperson) 1/1 100%



SHUEN LEUNG Lai Sheung Loretta 1/1 100%


During the year 2017, the Risk Committee had performed the following works:

• reviewed and concurred the revised Risk Management Policy for the Board’s approval; and

• reviewed the works done by the Chief Risk Officer.

Auditors’ RemunerationDuring the year under review, the fees paid/payable to the Company’s external auditors, Ernst & Young, Hong Kong, are as

follows:

Fees paid/payableServices rendered HK$’000

Audit services 3,295

Non-audit services* 1,472

Total: 4,767

* The non-audit services fees paid/payable to the external auditors were for advice on taxation matters and for preparation, review,

submission of tax returns and other non-audit engagement.

Accountability and AuditFinancial Reporting

Directors are responsible for overseeing the preparation of consolidated financial statements of each financial period

which give a true and fair view of the financial position of the Company and its subsidiaries as at the end of the reporting

period and of their financial performance and cash flows for that period then ended. In preparing the consolidated financial

statements for the year ended 31st December, 2017, the directors selected suitable accounting policies and applied them

consistently, adopted appropriate Hong Kong Financial Reporting Standards and Hong Kong Accounting Standards which

are pertinent to its operations and relevant to the financial statements, made judgments and estimates that are prudent and

reasonable, and prepared the accounts on the going concern basis.



Accountability and Audit (cont’d)Financial Reporting (cont’d)

The consolidated financial statements of the Company and its subsidiaries for the year ended 31st December, 2017 have

been audited by the external auditors, Ernst & Young, and reviewed by the Audit Committee. The directors acknowledged

their responsibility for preparing the consolidated financial statements which were prepared in accordance with statutory

requirements and applicable accounting standards. As at 31st December, 2017, the directors were not aware of any material

uncertainties relating to events or conditions which might cast significant doubt upon the Company’s ability to continue as a

going concern.

The responsibilities of the external auditors with respect to the audit of the consolidated financial statements of the Company

and its subsidiaries for the year ended 31st December, 2017 are set out in the “Independent Auditor’s Report” on pages 58

and 62 of this annual report.

Risk Management and Internal Control

The Board acknowledged the responsibility for maintaining and overseeing an appropriate and effective risk management

and internal control systems. These systems will monitor the material aspects of the Group’s business and operations and

also to safeguard its assets. The risk management and internal control systems of the Group comprises a well-established

organisational structure and the internal policies, procedures and guidelines. Such systems are designed to manage the

Group’s risks within an acceptable risk profile, rather than to eliminate the risk of failure to achieve business objectives, and

can only provide reasonable but not absolute assurance against material misstatement or loss, and to manage and minimize

risks of failure in operational systems.

The Board delegates operational duties and responsibilities to the management, which comprises senior staff and operating

heads of different business units/departments. The management oversees the daily business operations, identifies potential

opportunities and inherent risks so that the identified risks can be well-understood, managed and/or mitigated. Appropriate

operation policies, standards and procedures are in place in different business units/departments and being exercised

accordingly, and their efficiency and effectiveness are monitored by the head of each business unit/department to ensure

effective segregation of duties.

The Board has adopted the Risk Management Policy which covers the Group’s risk appetite and risk management

framework at strategic and operation levels in identifying, measuring, monitoring and controlling risks including credit risk,

liquidity risk, interest rate risk, foreign exchange risk, equity price risk, market risk, insurance risk, capital management,

operational risk, compliance risk, technology risk, human resources risk, investment risk and cyber risk.

The Board has established the Risk Committee during the year 2017 to assist the Board to oversee the effectiveness of the

Group’s risk management system with the assistance of the Chief Risk Officer who takes up the risk management functions

and developed the Risk Register and the Enterprise Risk Management Manual for implementing risk management and

internal control practices. The Chief Risk Officer is also responsible for reviewing the risk management status in the Group,

to monitor and review the execution of and compliance with the established risk control policies and measures. Regular

audits or reviews are conducted to provide assurance that the risk controls are in place in business and operational units

of the Group. The Chief Risk Officer presents reports to the members of the Risk Committee on the effectiveness of risk

management/control system.



Accountability and Audit (cont’d)Risk Management and Internal Control (cont’d)

The Board also delegates the responsibility of reviewing the effectiveness of the Group’s internal control systems to the Audit

Committee. The Audit Committee monitors the Group’s risk management processes and internal control systems through

the Internal Audit and Compliance Department (“IACD”). IACD performs ongoing assessments and regular independent

reviews of all material controls of the Group, checks for compliance with policies and standards and evaluates the

effectiveness of internal control structures across the Group.

To complement the in-house internal audit team, the Company also engaged an external consultant during the year to assist

in performing periodic internal audits and reviews on certain departments and business units across the Group. IACD and

the external consultant presented the internal audit reports to the members of the Audit Committee and also the compliance

reports to the members of the Compliance Committee. The reports were then followed up to ensure corrective actions have

been taken in respect of any finding previously identified and they have been properly resolved.

Using a risk-and-control based audit approach, IACD and the external consultant plan their respective internal audit

schedules and reviews annually with audit resources being focused on higher risk areas. Their internal audit plan for each

financial year are discussed with and submitted to the Audit Committee for review and approved before the end of the

preceding year.

The Audit Committee reviewed the effectiveness of the Group’s internal control systems covering all material controls,

including financial, operational, compliance, and risk management functions during the year and the resources allocated to

internal control operations. The Audit Committee reported the review result to the Board following each Audit Committee

meeting. The Board reviewed, considered and satisfied that the Group’s internal control systems and risk management

functions are effective, adequate and in compliance with the risk management and internal control code provisions of the CG

Code.

The Board has adopted the Inside Information Disclosure Policy which sets out the approach, procedures and internal

controls for the handling and dissemination of inside information of the Group to ensure the inside information is maintained

confidentially or to be disseminated to the public in timely and accurate manner in accordance with the Securities and

Futures Ordinance (Chapter 571 of the Laws of Hong Kong), the Listing Rules and all other applicable rules and regulations.

The Inside Information Disclosure Policy will be reviewed, as appropriate, and any amendment to such policy shall be

approved by the Board to ensure its continued effectiveness from time to time.

Professional Training of Company SecretaryThe Company Secretary, Mr. LAU Chi Tak, is an employee of the Company and has day-to-day knowledge of the

Company’s affairs. He reports to the Chairman and the President. All directors have direct access to the advice and service

of the Company Secretary to ensure that board procedures, and applicable laws, rules and regulations are followed. The

Company Secretary confirmed that he has taken no less than 15 hours of relevant professional training during the year

2017.



Remuneration of Directors and Senior ManagementThe Remuneration Policy of the Company is to maintain fair and competitive packages based on business needs and

industry practice. The overall remuneration package of each individual director and senior management is determined based

on the market level of similar positions in comparable companies and by reference to factors including director’s working

positions, qualifications, experience, level of responsibilities as well as the Group’s performance and profitability.

During the year, the level of fees and emoluments paid to directors and senior management depends on their respective

contractual terms under employment contracts or letters of appointments, if any, and as recommended by the Remuneration

Committee and approved by the Board or shareholders at the Company’s AGM.

Information relating to the remuneration of directors on a named basis for the year ended 31st December, 2017 is set out in

note 7 to the financial statements.

Constitutional DocumentsThere was no change to the Company’s Memorandum of Association and Bye-laws during the year ended 31st December,

2017. A copy of the latest consolidated version of the Memorandum of Association and Bye-laws is available on the

websites of the Company and the Stock Exchange.

Communications with ShareholdersThe Board recognises the importance of good communications with all shareholders. The Company has established

the Shareholders Communication Policy and posted it on its website. The policy sets out the processes to provide the

shareholders with ready, equal, timely and understandable information on the Company in order to enable them to exercise

their rights in an informed manner.

The Company is committed to maintaining a policy of open and timely disclosure of relevant information on its attributes to

shareholders and other stakeholders through the publication of interim and annual reports, public announcements and other

public circulars, all of which are available on the websites of the Company and the Stock Exchange. The Company usually

conducts post-results press conferences, with executive directors and senior management present to answer questions.

Meetings with institutional investors and financial analysts are also conducted upon such requests being received.

The AGM provides a useful forum for shareholders to exchange views with the Board. Shareholders are encouraged to

attend the AGM for which at least 20 clear business days prior notice is given. The Chairman as well as chairmen of the

Audit Committee, the Compliance Committee, the Nomination Committee, the Remuneration Committee and the Risk

Committee (or in their absence, other members of such committees) together with the external auditors are available to

answer shareholders’ questions at the meeting. The Chairman also advised all other directors to attend the AGM in order to

develop a balanced understanding of the views of shareholders. All resolutions proposed at the AGM must be decided on a

poll, which the Company’s branch share registrar in Hong Kong will conduct as scrutineer for the vote-taking and the results

of the poll will be published on the websites of the Company and the Stock Exchange.

The Company’s last AGM was held at its principal place of business, 16th Floor, Worldwide House, 19 Des Voeux Road

Central, Hong Kong on Wednesday, 24th May, 2017. All the resolutions proposed at that meeting were approved by the

shareholders by poll voting. Details of the poll results are available on both the Company’s and Stock Exchange’s websites.

The next AGM will be held on Wednesday, 16th May, 2018, the notice of which will be set out in the circular to shareholders

to be sent together with this annual report on or about 13th April, 2018.



Shareholders’ RightsConvening a Special General Meeting

Shareholders holding in aggregate of not less than one-tenth (1/10) of the paid up capital can send a written request to the

Board or the Secretary of the Company to request a Special General Meeting (“SGM”).

The written request should be deposited at the Company’s principal place of business for the attention of the Company

Secretary.

The written request must state the resolution(s), accompanied by a statement of the matters referred in the proposed

resolution(s) and signed by the shareholders concerned.

The request will be verified with the Company’s share registrar and upon its confirmation that the request is proper and in

order, the Company will convene a SGM within twenty-one (21) days of the deposit of the request. The actual SGM shall be

held within two (2) months after the deposit of the written request.

Notice of SGM will be sent out at least fourteen (14) clear days before the meeting unless shorter notice is permitted by the

majority members having the right to attend and vote at the meeting.

Making Proposals at Shareholders’ Meeting

Shareholder can send a written request to the Board or the Secretary of the Company to make proposal(s) at a

shareholders’ meeting. The written request must state the resolution(s), accompanied by a statement of the matters referred

in the proposed resolution(s) and signed by the shareholder concerned.

The written request should be deposited with the Company at its principal place of business at least fourteen (14) clear days

before the date of the shareholders’ meeting.

The request will be verified with the Company’s share registrar and upon its confirmation that the request is proper and in

order, the Company Secretary will ask the Board to include the proposed resolution(s) in the agenda for the shareholders’

meeting.

A revised notice of the shareholders’ meeting that included the proposed resolution(s) will be issued to the shareholders.

Nomination of Person for Director Election

A shareholder who wishes to nominate a person to stand for election as a director at the Company’s AGM should send a

written notice to the Company Secretary at the Company’s principal place of business within the period of at least seven (7)

days as determined by the Company. Such lodgement period will commence no earlier than the day after dispatch of the

notice of AGM and end no later than seven (7) days prior to the date of AGM.

The nomination notice must be signed by the nominating shareholder and stated: (i) the name, address and shareholding of

the nominating shareholder; (ii) the proposed candidate’s biographical details as required by the Rule 13.51(2) of the Listing

Rules; and (iii) a signed letter from the candidate confirming willingness to act as director if being elected.

The nomination notice will be verified with the Company’s share registrar and upon its confirmation that the notice is proper

and in order, the Company Secretary will arrange a meeting of the Nomination Committee of the Company.



Shareholders’ Rights (cont’d)Nomination of Person for Director Election (cont’d)

The nomination notice will be reviewed by the members of the Nomination Committee who will consider the factors such as

character, integrity, diversity of experience, area of expertise, other commitments, independence and other factors that the

Nomination Committee may consider appropriate.

After assessing the nomination, the Nomination Committee will send a report to the Board advising whether the candidate

possessed the qualifications for a position on the Board. The Nomination Committee will recommend the right candidate to

the Board for election as a director at the AGM.

The Company will publish an announcement or issue a supplementary circular and dispatch it to shareholders containing the

details of the candidate(s) proposed. The assessment conclusion of the Nomination Committee will also be included in the

supplementary circular for the consideration of shareholders.

The shareholder proposing the candidate will be required to attend the AGM and read out the proposed resolution at the

AGM.

Sending Enquiries

Shareholders enquire about their shareholdings should contact the Company’s branch share registrar, Computershare Hong

Kong Investor Services Limited at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong.

Shareholders who have any queries to the Board should send the questions to the Company Secretary whose details are as

follows:

The Company Secretary

Asia Financial Holdings Limited

16th Floor, Worldwide House

19 Des Voeux Road Central

Hong Kong

Email : [email protected]

Tel : (852) 3606 9200

Fax : (852) 2545 3881

Public FloatBased on the information that is publicly available to the Company and within the knowledge of the directors, the Company

has maintained the prescribed amount of public float during the year 2017 and up to the date of this annual report as

required by the Listing Rules.

Report of the Directors



The directors present their report and the audited financial statements for the year ended 31st December, 2017.

Principal ActivitiesThe principal activity of the Company is investment holding. Details of the principal activities of its principal subsidiaries

are set out in detail in note 39 to the financial statements. There were no significant changes in the nature of the Group’s

principal activities during the year.

Business ReviewA discussion and analysis of the activities of the Group as required by Schedule 5 to the Hong Kong Companies

Ordinance, including a fair review of the Group’s business; a description of the principal risks and uncertainties facing the

Group; particulars of important events affecting the Group that have occurred since the end of the financial year 2017; an

indication of likely future development in the Group’s business; an analysis of the Group’s performance using financial key

performance indicators; a discussion on the Group’s environmental policies and performance; the Group’s compliance with

the relevant laws and regulations that have a significant impact on the Group; and an account of the key relationships with

its stakeholders that have a significant impact on the Group and on which the Group’s success depends, are provided in

the “Chairman’s Statement”, “Management Discussion and Analysis”, “Corporate Governance Report”, and “Environmental,

Social and Governance Report” set out on pages 3 to 44 of this annual report.

Results and DividendsThe Group’s profit for the year ended 31st December, 2017 and the Group’s financial position at that date are set out in the

financial statements on pages 63 to 148.

An interim dividend of HK4.0 cents per ordinary share, totalling approximately HK$39,139,000, was paid on 27th

September, 2017.

The directors recommend the payment of a final dividend of HK7.5 cents per ordinary share, totalling approximately

HK$73,386,000 in respect of the year, which will be payable on or about 5th June, 2018 in cash to shareholders on the

register of members of the Company on 28th May, 2018. This recommendation has been incorporated into the financial

statements as an allocation of the retained profits within the equity section in the Group’s statement of financial position.

Further details of this accounting treatment are set out in note 10 to the financial statements.

Share CapitalThere were no movements in the Company’s share capital during the year.

Equity-linked AgreementsThere were no equity-linked agreements entered into by the Group during the year or subsisting at the end of the year.



Purchase, Redemption or Sale of Listed Securities of the CompanyNeither the Company nor any of its subsidiaries purchased, redeemed or sold any of the Company’s listed securities during

the year.

Distributable ReservesAt 31st December, 2017, the Company’s reserves available for cash distribution, calculated in accordance with the

provisions of the Bermuda Companies Act 1981, amounted to HK$2,827,488,000, of which HK$73,386,000 has been

proposed as a final dividend for the year. In addition, the Company’s share premium account and capital reserve, in the

amount of HK$620,591,000 in aggregate, may be distributed in the form of fully paid bonus shares.

Five Years Financial SummaryThe results and assets, liabilities and non-controlling interests of the Group for the last five years, as extracted from the

published audited financial statements as appropriate, are summarised below:

Results

Year ended 31st December,

2017 2016 2015 2014 2013

HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

Revenue 1,294,323 1,287,457 1,173,510 1,279,625 1,448,080

Profit for the year 469,880 369,038 187,638 373,653 275,207

Profit for the year attributable to:

Equity holders of the Company 468,187 367,271 186,063 365,507 270,731

Non-controlling interests 1,693 1,767 1,575 8,146 4,476

469,880 369,038 187,638 373,653 275,207

Assets, liabilities and non-controlling interests

31st December,

2017 2016 2015 2014 2013

HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

Total assets 11,982,746 10,259,709 10,164,022 9,961,152 9,245,573

Total liabilities (3,960,612) (3,180,105) (3,104,093) (3,014,259) (2,970,153)

Non-controlling interests (45,689) (43,090) (40,312) (38,391) (30,520)

7,976,445 7,036,514 7,019,617 6,908,502 6,244,900



Major CustomersDuring the year, the Group derived less than 30% of its total income from its five largest customers.

As far as the directors are aware, none of the directors of the Company, or any of their associates and shareholders, which,

to the knowledge of the directors, own more than 5% of the Company’s issued share capital, had any beneficial interest in

the Group’s five largest customers.

Major SuppliersThe Group’s major subsidiary is an insurance company, which is exempted from disclosing the particulars of suppliers.

Accordingly, no such information has been disclosed.

DirectorsThe directors of the Company during the year and up to the date of the report were:

CHAN Yau Hing Robin*, G.B.S., LL.D., J.P.

CHAN Bernard Charnwut*, G.B.S., J.P.

TAN Stephen*

WONG Kok Ho*

SOPHONPANICH Choedchu (Resigned on 9th June, 2017)

SOPHONPANICH Chote (Appointed on 6th December, 2017)

YAMAMOTO Takao

TANAKA Junichi

CHAN Yeow Toh

CHOW Suk Han Anna**

MA Andrew Chiu Cheung**

SIAO Chi Lam Kenneth** (Resigned on 10th August, 2017)

WONG Yu Hong Philip**, G.B.S. (Resigned on 9th June, 2017)

LAI KO Wing Yee Rebecca**, J.P.

SHUEN LEUNG Lai Sheung Loretta** (Appointed on 16th August, 2017)

* Executive directors

** Independent non-executive directors

In accordance with Bye-law 87(2) of the Company’s Bye-laws, Dr. CHAN Yau Hing Robin, Mr. WONG Kok Ho and Mr.

YAMAMOTO Takao will retire by rotation at the forthcoming annual general meeting (the “2018 AGM”) and all of them, being

eligible, will offer themselves for re-election except Mr. Yamamoto who will not offer himself for re-election and will retire as

non-executive director of the Company with effect from the conclusion of the 2018 AGM.

In accordance with Bye-law 86(2) of the Company’s Bye-laws, Mrs. SHUEN LEUNG Lai Sheung Loretta holds office only

until the 2018 AGM and, being eligible, will offer herself for re-election at the meeting. Mr. SOPHONPANICH Chote who

also holds office until the 2018 AGM and, being eligible, will not offer himself for re-election. He will retire as non-executive

director of the Company with effect from the conclusion of the 2018 AGM.



Directors (cont’d)Moreover, Mr. TANAKA Junichi and Ms. CHAN Yeow Toh have tendered their resignations as non-executive directors

of the Company due to their job relocation and other commitments. Mr. Tanaka’s resignation will be effective from 23rd

March, 2018 and Ms. Chan’s resignation will be effective from 31st March, 2018. The Board has approved to appoint Mr.

KAWAUCHI Yuji as a non-executive director of the Company to be effective on 23rd March, 2018 and Mr. Kawauchi will hold

office only until the 2018 AGM and shall then be eligible for re-election at that meeting.

The Company has received from each independent non-executive director an annual independence confirmation of his/her

independence pursuant to Rule 3.13 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong

Limited (the “Listing Rules”). The Company still considers that all of them are independent.

Directors’ Service ContractsNone of the directors proposed for re-election at the forthcoming annual general meeting has a service contract with the

Company which is not determinable by the Company within one year without payment of compensation, other than statutory

compensation.

Directors’ and Chief Executive’s Interests and Short Positions in Shares and Underlying SharesAs at 31st December, 2017, the interests of the directors and chief executive in the shares and underlying shares of the

Company or its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance, Cap. 571

of the Laws of Hong Kong (the “SFO”)) as recorded in the register required to be kept by the Company under section 352

of the SFO or as otherwise notified to the Company and the Stock Exchange of Hong Kong Limited (the “Stock Exchange”)

pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers (the “Model Code”) in the Listing Rules

were as follows:

Number of ordinary shares held, capacity and nature of interest

Name of director

Directlybeneficially

owned

Throughspouse or

minor children

Throughcontrolled

corporation Total

Percentage of

the Company’s

issued share

capital (1)

CHAN Yau Hing Robin – – 578,829,712 (2) 578,829,712 59.16

CHAN Bernard Charnwut 1,382,334 – – 1,382,334 0.14

WONG Kok Ho 810,000 430,000 – 1,240,000 0.13

CHOW Suk Han Anna 41,559 – – 41,559 0.00

Notes:

(1) Based on 978,478,000 shares in issue as at 31st December, 2017.

(2) Out of the 578,829,712 shares, (i) 566,069,712 shares were held through Claremont Capital Holdings Ltd (“Claremont Capital”), (ii)

8,830,000 shares were held through Robinson Enterprise Limited, (iii) 3,097,000 shares were held through Asia Panich Investment

Company (Hong Kong) Limited (“Asia Panich”) and (iv) 833,000 shares were held through Man Tong Company Limited (“Man Tong”).

More than one third of the issued share capital of Claremont Capital, Asia Panich and Man Tong are held by Cosmos Investments

Inc. These corporations or their directors are accustomed to act in accordance with the directions or instructions of Dr. CHAN Yau

Hing Robin.



Directors’ and Chief Executive’s Interests and Short Positions in Shares and Underlying Shares (cont’d)In addition to the above, Dr. CHAN Yau Hing Robin and Mr. WONG Kok Ho have non-beneficial personal equity interests

in certain subsidiaries held for the benefit of the Company solely for the purpose of complying with the minimum company

membership requirements.

Save as disclosed above, as at 31st December, 2017, none of the Company’s directors and chief executive had registered

an interest or a short position in the shares or underlying shares of the Company or any of its associated corporations that

was required to be recorded pursuant to section 352 of the SFO, or as otherwise notified to the Company and the Stock

Exchange pursuant to the Model Code.

Directors’ Rights to Acquire Shares or DebenturesAt no time during the year there were rights to acquire benefits by means of acquisition of shares in or debentures of the

Company granted to any director or their respective spouses or minor children, or were any such rights exercised by them,

or was the Company, its holding company or any of its subsidiaries a party to any arrangement to enable the directors to

acquire such rights in any other body corporate.

Substantial Shareholders’ and Other Persons’ Interests and Short Positions in Shares and Underlying SharesAs at 31st December, 2017, the following persons (other than the directors or chief executive of the Company) had interests

or short positions in the shares and underlying shares of the Company as recorded in the register required to be kept by the

Company pursuant to section 336 of the SFO, or as otherwise notified to the Company:

Percentage of

Number of the Company’s

ordinary issued share

Name of shareholder Notes shares held capital (1)

Cosmos Investments Inc. (2), (3) 569,999,712 58.25

Claremont Capital Holdings Ltd (2) 566,069,712 57.85

Bangkok Bank Public Company Limited 95,488,236 9.76

Sompo Holdings, Inc. (4) 87,465,753 8.94

Sompo Japan Nipponkoa Insurance Inc. (4) 87,465,753 8.94

Aioi Nissay Dowa Insurance Company, Limited 52,550,175 5.37



Substantial Shareholders’ and Other Persons’ Interests and Short Positions in Shares and Underlying Shares (cont’d)Notes:

(1) Based on 978,478,000 shares in issue as at 31st December, 2017.

(2) These shares have been included in the interest disclosure of Dr. CHAN Yau Hing Robin as set out in the section “Directors’ and

chief executive’s interests and short positions in shares and underlying shares” above.

(3) Cosmos Investments Inc. was deemed to be interested in 569,999,712 shares in which 566,069,712 shares were held by Claremont

Capital, 3,097,000 shares were held by Asia Panich and 833,000 shares were held by Man Tong since Cosmos Investments Inc.

holds more than one-third of the issued share capital of Claremont Capital, Asia Panich and Man Tong, respectively.

(4) Sompo Japan Nipponkoa Insurance Inc. (“SJNII”) is a wholly-owned subsidiary of Sompo Holdings, Inc. (“SHI”) and accordingly, the

shares in which SJNII is shown as interested are included in the shares in which SHI is shown as interested.

Save as disclosed above, as at 31st December, 2017, no other persons had registered an interest or a short position in the

shares or underlying shares of the Company that was required to be recorded pursuant to section 336 of the SFO.

Directors’ Interests in Transactions, Arrangements or ContractsSave as disclosed in note 34(a) to the financial statements, no director nor a connected entity of a director had a material

beneficial interest, either directly or indirectly, in any transactions, arrangements or contracts of significance to the business

of the Group to which the Company, the holding company of the Company, or any of the Company’s subsidiaries was a

party during the year.

No contracts concerning the management and administration of the whole or any substantial part of any business of the

Company and the Company’s subsidiaries were entered into or existed during the year.

No right to subscribe for equity or debt securities of the Company has been granted by the Company to, or have any such

rights been exercised by, any person during the year ended 31st December, 2017.

Permitted Indemnity ProvisionThe Company’s Bye-laws provides that all directors or other officers of the Company shall be entitled to be indemnified out

of the Company’s assets against all losses or liabilities which he or she may incur or sustain in or about the execution of the

duties of his or her office or otherwise in relation thereto. In addition, the Company has maintained appropriate directors’ and

officers’ liability insurance throughout the year, which provides appropriate cover for certain legal actions brought against its

directors and officers.



Directors’ Interests in Competing BusinessesDuring the year and up to the date of this report, the following directors are considered to have interests in the following

businesses which compete or are likely to compete, either directly or indirectly, with the businesses of the Group, other

than those businesses where the directors of the Company were appointed as directors to represent the interests of the

Company and/or the Group, pursuant to the Listing Rules, as set out below:

Name of entity Description of the

whose businesses businesses of the entity

are considered to which are considered Nature of

compete or likely to compete or likely interest of the

to compete with the to compete with the director in

Name of director businesses of the Group businesses of the Group the entity

CHAN Yau Hing Robin The People’s Insurance Company of

China (Hong Kong), Limited

General insurance Director

CHAN Bernard Charnwut The People’s Insurance Company of

China (Hong Kong), Limited


Sompo Japan Nipponkoa Insurance

(China) Company Limited


WONG Kok Ho Sompo Japan Nipponkoa Insurance

(Hong Kong) Company Limited


Although the companies listed above operate in similar fields to certain operations of the Group, the board believes that the

directors concerned are able to manage any potential conflicts of interest arising from their respective directorships and/or

interests in such companies.

As the board of directors of the Company is independent from the boards of directors of these companies, the Group is

capable of carrying on its businesses independently of, and at an arm’s length from, the businesses of these companies.



Brief Biographical Details of Directors and Senior Management StaffExecutive Directors:

Dr. CHAN Yau Hing Robin, G.B.S., LL.D., J.P., aged 85, is the Chairman and an executive director of the Company

and Asia Insurance Company, Limited (“Asia Insurance”), a wholly-owned subsidiary of the Company. Dr. Chan has been

working for the Group for over 60 years. He is also a director of several other subsidiaries of the Company and a director of

Claremont Capital Holdings Ltd, the controlling shareholder of the Company. Dr. Chan was awarded the Knight Commander

(Second Class) of the Most Noble Order of the Crown of Thailand by His Majesty, the King of Thailand and the Gold Bauhinia

Star by the Government of the HKSAR in 2000. He was also conferred with the Honorary University Fellowships by Hong

Kong Baptist University and the University of Hong Kong in 2010 and 2011 respectively, and the Honorary Fellowship by

The Hong Kong University of Science and Technology in 2013. Dr. Chan is the Life Honorary Chairman of The Chinese

General Chamber of Commerce and the Vice Chairman of the All-China Federation of Returned Overseas Chinese. He is

also the Founding Chairman and President of the Hong Kong Federation of Overseas Chinese Associations Limited, the

Honorary Chairman of both the China Federation of Overseas Chinese Entrepreneurs and Federation of HK Chiu Chow

Community Organizations Limited, and an adviser of the China Overseas Chinese Entrepreneurs Association. Dr. Chan had

been a Deputy to The National People’s Congress of the People’s Republic of China from March 1988 to February 2008.

He has extensive experience in the banking industry and acts as an adviser to numerous other companies. Dr. Chan is also

an independent non-executive director of K. Wah International Holdings Limited and Keck Seng Investments (Hong Kong)

Limited, both of which are listed on the Stock Exchange. Dr. Chan is the father of Mr. TAN Stephen and Mr. CHAN Bernard

Charnwut and is the brother of Mr. SOPHONPANICH Chote.

Mr. CHAN Bernard Charnwut, G.B.S., J.P., aged 53, is an executive director and the President of the Company and Asia

Insurance. Mr. Chan is a member of the remuneration committee, the nomination committee, the compliance committee

and the risk committee of the Company and also the Chairman of AFH Charitable Foundation Limited. Mr. Chan has been

working for the Group for 28 years. He is the son of Dr. CHAN Yau Hing Robin, the brother of Mr. TAN Stephen and the

nephew of Mr. SOPHONPANICH Chote. He graduated from Pomona College in California, U.S.A. In addition to directorships

in other subsidiaries of the Company, Mr. Chan is an independent non-executive director of Yau Lee Holdings Limited,

Chen Hsong Holdings Limited and China Resources Beer (Holdings) Company Limited, all of which are listed on the Stock

Exchange. In October 2017, Mr. Chan has been appointed as a director of Bumrungrad Hospital Public Company Limited

which is a company listed in Thailand. He resigned as a non-executive director of City e-Solutions Limited (now known as

China Tian Yuan Health Care Group Limited) on 9th September, 2016 which is a listed company in Hong Kong. Mr. Chan

is currently a director of PICC Life Insurance Company Limited, a director of Claremont Capital Holdings Ltd which is the

controlling shareholder of the Company, the Chairman of Hong Kong-Thailand Business Council and an adviser to Bangkok

Bank (China) Company Limited. Mr. Chan has been elected a Deputy to The National People’s Congress of the People’s

Republic of China since January 2008. He has also been appointed as the Convenor among the Non-official Members of the

Executive Council of the HKSAR since 1st July, 2017. Mr. Chan is a member of Hong Kong Monetary Authority Exchange

Fund Advisory Committee. He is also a trustee of Pomona College, California U.S.A. and serves as the Chairperson of The

Hong Kong Council of Social Service.



Brief Biographical Details of Directors and Senior Management Staff (cont’d)Executive Directors: (cont’d)

Mr. TAN Stephen, aged 64, has been an executive director of the Company since 30th May, 2006 and has been working

for the Group for 31 years. He is a member of the compliance committee of the Company. In addition to directorships in

other subsidiaries of the Company, Mr. Tan sits on the boards of AFH Charitable Foundation Limited, Bank Consortium

Trust Company Limited and Hong Kong Life Insurance Limited. He is also an independent non-executive director of Pioneer

Global Group Limited and China Motor Bus Company, Limited, both of which are listed on the Stock Exchange. Mr. Tan

serves as a Standing Committee Member of The Chinese General Chamber of Commerce, the Vice President of Hong

Kong Chiu Chow Chamber of Commerce, the Incumbent Honorary President of Chiu Yang Residents Association of Hong

Kong Limited and the Manager of Chiu Yang Primary School of Hong Kong. Mr. Tan is a voting member of Tung Wah

Group of Hospitals Advisory Board, a founding member of both Hong Kong-Thailand Business Council and Hong Kong-

Korea Business Council, a trustee of Outward Bound Trust of Hong Kong, a charter member of The Rotary Club of The

Peak and a founding member of Opera Hong Kong Limited. Mr. Tan is also a member of the Board of Governors of Hong

Kong Sinfonietta Limited and the honorary adviser of the Hong Kong Baseball Association. Mr. Tan was educated in the

U.S.A. and holds a bachelor’s degree in Business Administration from Rutgers University, and a master’s degree in Business

Administration from St. John’s University. He is the son of Dr. CHAN Yau Hing Robin, the brother of Mr. CHAN Bernard

Charnwut and the nephew of Mr. SOPHONPANICH Chote.

Mr. WONG Kok Ho, aged 70, has been an executive director of the Company since 2nd May, 2007 and has served the

Group for over 40 years. Mr. Wong is an executive director of Asia Insurance and a director of several other subsidiaries

of the Company. Mr. Wong was the Chief Executive Officer of Asia Insurance until October 2016 and has extensive

experience in the insurance industry. He sits on the boards of AFH Charitable Foundation Limited, AR Consultant Service

(HK) Limited, Professional Liability Underwriting Services Limited and Asia Insurance (Philippines) Corporation. Mr. Wong is

also an independent non-executive director of Sompo Japan Nipponkoa Insurance (Hong Kong) Company Limited, and an

adviser to both BE Reinsurance Limited and BC Reinsurance Limited. Mr. Wong was educated in Hong Kong and Deakin

University, Melbourne, Australia and is a fellow member of The Chartered Insurance Institute, London. Mr. Wong is currently

a member of the insurance subsector of the Election Committee 2018. He had served as the Chairman and a councillor

of the Employees Compensation Insurer Insolvency Bureau, the General Insurance Council of the Hong Kong Federation

of Insurers (HKFI) and the Council of Motor Insurers’ Bureau of Hong Kong. He had also been a member of the General

Committee of the Insurance Claims Complaints Bureau, the Governing Committee of the HKFI and the President of the

Insurance Institute of Hong Kong.



Brief Biographical Details of Directors and Senior Management Staff (cont’d)Non-Executive Directors:

Mr. SOPHONPANICH Chote, aged 75, has been a non-executive director of the Company since 6th December, 2017. Mr.

Sophonpanich is chairman of Green Spot Co., Ltd. and Krungdhep Sophon Public Company Limited which is listed on the

Stock Exchange of Thailand. He is also a director of Watana Chote Co., Ltd. He is the brother of Dr. CHAN Yau Hing Robin,

the uncle of both Mr. TAN Stephen and Mr. CHAN Bernard Charnwut. Mr. Sophonpanich attended Knox Grammar School

at Wahroonga, Sydney and graduated in Economics at University of Sydney in 1964. He had served on various positions in

Bangkok Bank Public Company Limited (“Bangkok Bank”) including London branch manager & European Representative,

Asian Regional manager at Hong Kong and senior Executive Vice President. He was also a member of the board of directors

of Bangkok Bank. During his term at Bangkok Bank, Mr. Sophonpanich served as President of the Asian Pacific Bankers

Club whose members consisted of the leading banks in Asia and as chairman of ASEAN Finance Corporation at Singapore.

Mr. Sophonpanich was also a director of Stelux Holdings International Limited and had served as chairman of Capital

Nomura Securities Finance Ltd., United Palm Oil Plc., Tuntex (Thailand) Plc., Bangkok Fund Co., Ltd. and CS Capital Co.,

Ltd. Mr. Sophonpanich was also a director of Shangri-La Hotel (Thailand) Plc. and Crown Seal Plc. Mr. Sophonpanich also

served on the Board of the following charities/non-profit organizations: Foundation for the welfare of needy schoolchildren

under Royal Patronage of Her Majesty the Queen, Pol. Gen. Pow Sarasin Foundation, Chin Sophonpanich Foundation,

Vudhivithu Vudhijaya (Maag) Foundation, Board of Trustees, Thailand Management Association, Thai Public Policy

Foundation and Navamindradhiraj University Council.

Mr. TANAKA Junichi, aged 56, has been a non-executive director of the Company since 7th May, 2014. Mr. Tanaka is

currently the Managing Executive Officer of both Sompo Holdings, Inc. (a company listed in Japan) and its wholly-owned

subsidiary, Sompo Japan Nipponkoa Insurance Inc. (“Sompo Japan Nipponkoa”). He has been appointed as a non-

executive director of Endurance Specialty Holdings Limited on 28th March, 2017 when it was acquired by Sompo Japan

Nipponkoa and delisted from the New York Stock Exchange. Mr. Tanaka graduated from Japan’s Keio University, Faculty

of Law in 1984 and joined The Yasuda Fire and Marine Insurance Company Limited (“Yasuda”) in the same year. Yasuda

subsequently merged with other insurance companies in 2002 and 2014 respectively and became Sompo Japan Nipponkoa

which currently holds 8.94% of the Company’s issued share capital.

Mr. YAMAMOTO Takao, aged 60, has been a non-executive director of the Company since 19th May, 2016. Mr.

Yamamoto is an employee of Aioi Nissay Dowa Insurance Company, Limited (“Aioi Insurance”) and his current position is

the General Manager of Overseas Commercial & Marine Insurance Promotion Division and Corporate & Financial Business

Promotion Department. He was conferred the Degree of Political Science and Economics from Nihon University, Japan in

1982 and joined Chiyoda Fire & Marine Insurance Company, Limited (present known as Aioi Insurance) in the same year. Aioi

Insurance currently holds 5.37% of the Company’s issued share capital.

Ms. CHAN Yeow Toh, aged 62, has been a non-executive director of the Company and Asia Insurance since 28th June,

2007. Ms. Chan is currently a director of IMC Development & Management Limited and a director of a number of other

companies in Hong Kong and overseas. She is a fellow member of The Institute of Chartered Secretaries & Administrators,

the United Kingdom, and The Malaysian Association of Company Secretaries. Ms. Chan was the Company Secretary of IMC

Holdings Limited from 1990 until 2002 when it was delisted from the Stock Exchange. She was also the Chairman of Suntec

City Management Pte. Ltd. from July 2005 to December 2009.



Brief Biographical Details of Directors and Senior Management Staff (cont’d)Independent Non-Executive Directors:

Ms. CHOW Suk Han Anna, aged 70, has been an independent non-executive director of the Company since 27th

September, 2004. Ms. Chow is the chairperson of both the nomination committee and the compliance committee, and

a member of the audit committee, the remuneration committee and the risk committee of the Company. She is also an

independent non-executive director of Asia Insurance. Ms. Chow was admitted as a solicitor of the Supreme Court of

England and of Hong Kong respectively in 1973 and she has been in legal practice in Hong Kong since 1973. Ms. Chow

was a partner of Messrs. Peter C. Wong, Chow and Chow from 1st April, 1989 to 30th September, 2012 and has since 1st

October, 2012 become a consultant of the firm. The firm has since 1st February, 2016, changed its name to Guantao and

Chow. She was appointed as a Notary Public by the Faculty Office of Archbishop of Canterbury in 1984 and as a China-

Appointed Attesting Officer by the Ministry of Justice, The People’s Republic of China in 1991 and has been practicing as

a Notary Public and an attesting officer since the said years respectively. Ms. Chow was appointed as a chairperson and

a member of a number of public services committees of the Government of the HKSAR. She was a chairperson of the

Appeal Tribunal under Building Ordinance (Cap.123) and the Railway Objections Hearing Panel under the Transport Bureau

respectively. She was a member of the Vetting Committee for the Professional Services Development Assistance Scheme

under the Commerce and Economic Development Bureau, ICAC Complaints Committee, the Administrative Appeals Board,

Inland Revenue Review Board, the Criminal Injuries Compensation Board and the Law Enforcement Injuries Compensation

Board respectively. She served on the Inland Revenue Review Board as a deputy chairman from 1998 to 2007. She had also

been a member of the Solicitors Disciplinary Tribunal Panel of the Law Society. Ms. Chow is also a director of a number of

charitable organizations, namely Chi Lin Nunnery, Poh Yea Ching Shea Limited and Chi Hong Ching Yuen Limited. She was

a trustee of The D.H. Chen Foundation from 1st December, 1998 and became the honorary secretary of The D.H. Chen

Foundation on 1st January, 2010. She resigned as both a trustee and the honorary secretary of the foundation on 1st June,

2012. Ms. Chow is the honorary legal advisor to The Federation of Medical Societies of Hong Kong, and a director and the

honorary secretary to the Association of China-Appointed Attesting Officers Limited.

Mr. MA Andrew Chiu Cheung, aged 76, has been an independent non-executive director of the Company since 3rd

September, 2004. Mr. Ma is the chairman of the audit committee and a member of the remuneration committee, the

nomination committee, the compliance committee and the risk committee of the Company. He is also an independent

non-executive director of Asia Insurance. Mr. Ma is a founder and former director of AMA CPA Limited (formerly known as

Andrew Ma DFK (CPA) Limited) and a director of Mayee Management Limited. Mr. Ma has more than 40 years’ experience

in the fields of accounting, auditing and finance. He received his bachelor’s degree in economics from the London School of

Economics and Political Science (University of London) in England. Mr. Ma is a fellow member of The Institute of Chartered

Accountants in England & Wales, The Hong Kong Institute of Certified Public Accountants, The Hong Kong Institute of

Directors and The Taxation Institute of Hong Kong. He is currently an independent non-executive director of several other

listed companies in Hong Kong, including Asiaray Media Group Limited, China Resources Power Holdings Company

Limited, Chong Hing Bank Limited, C.P. Pokphand Co. Ltd. and C-MER Eye Care Holdings Limited. Mr. Ma resigned as an

independent non-executive director of Tanrich Financial Holdings Limited on 27th January, 2015, a company listed on the

Stock Exchange.

Mrs. LAI KO Wing Yee Rebecca, J.P., aged 59, has been an independent non-executive director of the Company

since 3rd December 2012. Mrs. Lai is the chairperson of both the remuneration committee and the risk committee, and

a member of the audit committee, the nomination committee and the compliance committee of the Company. She is also

an independent non-executive director of Asia Insurance. Mrs. Lai is the Director of Education Initiatives of China Graduate

School of Theology. She obtained her Bachelor of Arts (Hons) degree from University of Hong Kong, Master of Business

Administration from the Chinese University of Hong Kong and Master of Christian Studies (Counselling) from China Graduate

School of Theology. Mrs. Lai has over 25 years’ experience in the civil service. Her last position with the Government of the

HKSAR in 2006 was the Permanent Secretary for the Civil Service. Mrs. Lai currently is a Court member of City University of

Hong Kong.



Brief Biographical Details of Directors and Senior Management Staff (cont’d)Independent Non-Executive Directors: (cont’d)

Mrs. SHUEN LEUNG Lai Sheung Loretta, aged 63, has been an independent non-executive director of the Company

since 16th August, 2017. Mrs. Shuen is a member of the audit committee, the nomination committee, the compliance

committee, the remuneration committee and the risk committee of the Company. She is also a director of Evolot Foundation

Limited and an independent non-executive director of BE Reinsurance Limited. Mrs. Shuen is currently a fellow member of

CPA Australia and Hong Kong Institute of Certified Public Accountants. She received her Bachelor of Social Sciences (Hon)

degree from the University of Hong Kong and Master degree in Accounting Studies from the University of New England,

Australia. Mrs. Shuen is a former partner of Ernst & Young and has over 20 years of experience in serving clients in a wide

range of industries in Hong Kong, China and Asia Pacific region. She had over 15 years of experience in civil services and

had served in an investment bank before settling in Ernst & Young. Mrs. Shuen is an appointed member of the Council of

the Lingnan University (the “University”). She now served as the Treasurer to the Council of the University, the Chairman of

the Finance Committee, the Chairman of the Investment Subcommittee, a member of the Accounting Advisory Board, and a

member of the Risk and Insurance Advisory Board of the University.

Employees and Remuneration PolicyThe total number of employees of the Group was 274 at the end of the reporting period (2016: 308). Employees were

remunerated on the basis of their performance, experience and prevailing industry practice. Remuneration of the employees

includes salary and discretionary bonus which is based on the Group’s results and individual performance. Medical and

retirement benefit schemes are made available to all levels of personnel. There was no share option scheme in operation

during the year. The Group also offers various training and induction programmes to its employees.

The remuneration policy of the Group is formulated and recommended by the Remuneration Committee of the Company for

the Board’s approval. The Remuneration Committee’s responsibilities include reviewing and approving the management’s

remuneration proposals, and making recommendations to the Board on the adjustments to remuneration packages payable

to directors, senior management and employees of the Group.

DonationsDuring the year, the Group made charitable donations totalling HK$8,972,000 (2016: HK$3,322,000).

Sufficiency of Public FloatBased on information that is publicly available to the Company and within the knowledge of the directors, the Company

believes that the percentage of shares of the Company which were in the hands of the public was above the relevant

prescribed minimum percentage as at the date of this report.

Pre-emptive RightsThere are no provisions for pre-emptive rights under the Company’s Bye-laws or the laws of Bermuda which would oblige

the Company to offer new shares on a pro rata basis to existing shareholders.



Corporate GovernanceDetails of the Company’s corporate governance practices are set out in the Corporate Governance Report in this annual

report.

AuditorThe financial statements for the year ended 31st December, 2017 have been audited by Ernst & Young who retire and a

resolution for the reappointment as auditor of the Company will be proposed at the forthcoming annual general meeting.

ON BEHALF OF THE BOARD

CHAN Yau Hing Robin

Chairman

Hong Kong, 22nd March, 2018

Independent Auditor’s Report



To the shareholders of Asia Financial Holdings Limited

(Incorporated in Bermuda with limited liability)

OpinionWe have audited the consolidated financial statements of Asia Financial Holdings Limited (the “Company”) and its

subsidiaries (the “Group”) set out on pages 63 to 148, which comprise the consolidated statement of financial position as

at 31st December, 2017, and the consolidated statement of profit or loss, the consolidated statement of comprehensive

income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then

ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the consolidated financial statements give a true and fair view of the consolidated financial position of the

Group as at 31st December, 2017, and of its consolidated financial performance and its consolidated cash flows for the year

then ended in accordance with Hong Kong Financial Reporting Standards (“HKFRSs”) issued by the Hong Kong Institute of

Certified Public Accountants (“HKICPA”) and have been properly prepared in compliance with the disclosure requirements of

the Hong Kong Companies Ordinance.

Basis for OpinionWe conducted our audit in accordance with Hong Kong Standards on Auditing (“HKSAs”) issued by the HKICPA. Our

responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the consolidated

financial statements section of our report. We are independent of the Group in accordance with the HKICPA’s Code of

Ethics for Professional Accountants (the “Code”), and we have fulfilled our other ethical responsibilities in accordance with

the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our

opinion.

Key Audit MattersKey audit matters are those matters that, in our professional judgement, were of most significance in our audit of the

consolidated financial statements of the current period. These matters were addressed in the context of our audit of the

consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion

on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context.

We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the consolidated financial

statements section of our report, including in relation to these matters. Accordingly, our audit included the performance

of procedures designed to respond to our assessment of the risks of material misstatement of the consolidated financial

statements. The results of our audit procedures, including the procedures performed to address the matters below, provide

the basis for our audit opinion on the accompanying consolidated financial statements.



Key Audit Matters (cont’d)Key audit matter How our audit addressed the key audit matter

Estimation of insurance contracts liabilities

As at 31st December, 2017, the Group had insurance

contracts liabilities for reported claims and incurred but

not reported claims for the general insurance business of

HK$2,396 million in aggregate, representing 61% of the

Group’s total liabilities.

The estimation of insurance contracts liabilities requires

significant judgement and it may take a significant

period of time before the ultimate cost of the claims can

be established with certainty. The primary techniques

adopted by management in estimating the cost of the

ultimate claims included using the past claim settlement

trends to predict the future claims settlement trends

combined with actuarial and statistical projection

techniques; referencing to benchmarks of companies

in a similar industry sector; and the assessment by loss

adjusters.

Related disclosures are included in notes 2.5, 26 and 35

to the financial statements.

We involved our internal actuarial specialists to assist us in

performing our audit procedures, which included among

others: understanding the Group’s methodologies for

calculating the insurance contracts liabilities; evaluating the

assumptions used in the valuation of the insurance contracts

liabilities, by comparing to historical and market data; and

assessing the validity of liability adequacy tests by evaluating

the assumptions adopted in the context of the Group and

industry experience data and taking into account the features

of the specific insurance products.

Impairment of unlisted available-for-sale securities

As at 31st December, 2017, included in the Group’s

available-for-sale securities of HK$3,616 million were

investments in unlisted securities of HK$1,595 million,

representing 13% of the Group’s total assets. These

unlisted securities are stated at cost less impairment. At

the end of each reporting period, management assesses

whether there is any objective evidence that the unlisted

available-for-sale securities are impaired. When there

is objective evidence that the unlisted available-for-sale

securities are impaired, management makes assumptions

about the decline in value to determine the amount of

the impairment loss to be recognised in the statement

of profit or loss. The assessment on whether the

unlisted available-for-sale securities are impaired requires

significant management judgement.

Related disclosures are included in notes 2.5 and 18 to

the financial statements.

Our audit procedures included evaluating management’s

impairment assessment of the unlisted available-for-sale

securities, with reference to the financial information and

business plans of the respective investee companies,

performing analytical procedures on the financial information

of significant investee companies and reviewing relevant

market and industry information for any potential impairment

indicators.



Key audit matter How our audit addressed the key audit matter

Fair value measurement of securities measured at fair value through profit or loss and available-for-sale securities

As at 31st December, 2017, the Group had investments

in var ious securit ies, of which HK$3,758 mil l ion

representing 31% of the Group’s total asset, are stated

at fair value and classified as “securities measured at

fair value through profit or loss” or “available-for-sale

securities”. Fair value measurement can be a subjective

area, especially for securities with model based valuation

or with weak liquidity and price discovery. Valuation

techniques for securities without active markets can be

subjective in nature and involve various assumptions

regarding pricing factors. The use of different valuation

techniques and assumptions could lead to significantly

different estimates of fair value. Specific areas of focus

include the valuation of fair value of Level 2 assets where

valuation techniques are applied in which observable

inputs are used.

Related disclosures are included in notes 2.5, 18, 20 and

36 to the financial statements.

We reviewed management’s assessment of fair value and

performed independent price verification using external quotes

for liquid positions. In addition, we performed additional

procedures for areas of higher risk and estimation with the

assistance of our internal valuation specialists. These included

evaluating the pricing model methodologies and assumptions

of selected securities, and assessing the accuracy of the key

inputs to the models by comparing them with appropriate

benchmarks and pricing sources. We also assessed the

adequacy of the disclosures relating to the securities.

Other Information included in the Annual ReportThe directors of the Company are responsible for the other information. The other information comprises the information

included in the Annual Report, other than the consolidated financial statements and our auditor’s report thereon.

Our opinion on the consolidated financial statements does not cover the other information and we do not express any form

of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and,

in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements

or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have

performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

Key Audit Matters (cont’d)



Responsibilities of the Directors for the Consolidated Financial StatementsThe directors of the Company are responsible for the preparation of the consolidated financial statements that give a

true and fair view in accordance with HKFRSs issued by the HKICPA and the disclosure requirements of the Hong Kong

Companies Ordinance, and for such internal control as the directors determine is necessary to enable the preparation of

consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, the directors of the Company are responsible for assessing the Group’s

ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going

concern basis of accounting unless the directors of the Company either intend to liquidate the Group or to cease operations

or have no realistic alternative but to do so.

The directors of the Company are assisted by the Audit Committee in discharging their responsibilities for overseeing the

Group’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Consolidated Financial StatementsOur objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are

free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.

Our report is made solely to you, as a body, in accordance with section 90 of the Bermuda Companies Act 1981, and for

no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this

report.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with

HKSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are

considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic

decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with HKSAs, we exercise professional judgement and maintain professional scepticism

throughout the audit. We also:

• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud

or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient

and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting

from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,

misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are

appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the

Group’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and

related disclosures made by the directors.



Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements (cont’d)• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on

the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast

significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty

exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial

statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit

evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group

to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the consolidated financial statements, including the

disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a

manner that achieves fair presentation.

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities

within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction,

supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with the Audit Committee regarding, among other matters, the planned scope and timing of the audit and

significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide the Audit Committee with a statement that we have complied with relevant ethical requirements regarding

independence and to communicate with them all relationships and other matters that may reasonably be thought to bear on

our independence, and where applicable, related safeguards.

From the matters communicated with the Audit Committee, we determine those matters that were of most significance in

the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe

these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in

extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse

consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partner on the audit resulting in this independent auditor’s report is Chung Yuk Man.

Ernst & Young

Certified Public Accountants

22/F, CITIC Tower

1 Tim Mei Avenue

Central, Hong Kong

22nd March, 2018

Consolidated Statement of Profit or Loss

Year ended 31st December, 2017




Notes 2017 2016HK$’000 HK$’000

REVENUE 4 1,294,323 1,287,457

Gross premiums 27(a) 1,293,680 1,276,956Reinsurers’ share of gross premiums 27(b) (448,091) (427,240)

Net insurance contracts premiums revenue 845,589 849,716

Gross claims paid 28(a) (603,271) (477,493)Reinsurers’ share of gross claims paid 28(b) 191,838 156,973Gross change in outstanding claims 28(c) (690,542) (30,347)Reinsurers’ share of gross change in outstanding claims 28(d) 627,140 (17,899)

Net claims incurred (474,835) (368,766)

Commission income 92,014 86,819Commission expense (305,891) (295,721)

Net commission expense (213,877) (208,902)

Management expenses for underwriting business (77,743) (65,554)

Underwriting profit 79,134 206,494

Dividend income 114,114 135,994Realised gain on investments 121,636 9,909Unrealised gain on investments 176,698 2,413Interest income 65,885 60,576Other income and gains, net 21,975 1,711

579,442 417,097

Operating expenses (139,796) (126,857)Finance costs 5 (3,170) (2,761)

436,476 287,479

Share of profits and losses of joint ventures 48,246 36,857Share of profits and losses of associates 19,310 76,558

PROFIT BEFORE TAX 6 504,032 400,894

Income tax expense 9 (34,152) (31,856)

PROFIT FOR THE YEAR 469,880 369,038

…cont’d




Notes 2017 2016HK$’000 HK$’000

Attributable to:Equity holders of the Company 468,187 367,271Non-controlling interests 1,693 1,767

469,880 369,038

EARNINGS PER SHARE ATTRIBUTABLE TO ORDINARY EQUITY HOLDERS OF THE COMPANY 11

Basic– For profit for the year HK47.8 cents HK36.8 cents

Diluted– For profit for the year N/A N/A

Consolidated Statement of Comprehensive Income



Consolidated Statement of Comprehensive Income


Notes 2017 2016

HK$’000 HK$’000

PROFIT FOR THE YEAR 469,880 369,038

OTHER COMPREHENSIVE INCOME

Other comprehensive income/(expense) to be reclassified to

profit or loss in subsequent periods:

Available-for-sale securities:

Changes in fair value 496,362 (107,849)

Reclassification adjustment for gain on disposal included in the

consolidated statement of profit or loss (51,963) –

444,399 (107,849)

Share of other comprehensive income of joint ventures 5,359 2,978

Share of other comprehensive income/(expense) of associates 30,283 (27,313)

Exchange differences on translation of foreign operations 114 63

Net other comprehensive income/(expense) to be reclassified to

profit or loss in subsequent periods 480,155 (132,121)

Other comprehensive income not to be reclassified to

profit or loss in subsequent periods:

Asset revaluation reserve:

Gain on property revaluation 13 85,450 –

Net other comprehensive income not to be reclassified to

profit or loss in subsequent periods 85,450 –

OTHER COMPREHENSIVE INCOME/(EXPENSE)

FOR THE YEAR, NET OF TAX 565,605 (132,121)

TOTAL COMPREHENSIVE INCOME FOR THE YEAR 1,035,485 236,917

ATTRIBUTABLE TO:

Equity holders of the Company 1,032,886 234,139

Non-controlling interests 2,599 2,778

1,035,485 236,917

Consolidated Statement of Financial Position

31st December, 2017



31st December, 2017

Notes 2017 2016

HK$’000 HK$’000

ASSETS

Property, plant and equipment 13 176,450 335,487

Investment properties 14 280,200 28,200

Interests in joint ventures 15 208,734 280,104

Loans to a joint venture 15 54,000 56,500

Interests in associates 16 436,700 357,817

Due from associates 16 256,140 200,765

Held-to-maturity securities 17 725,558 651,969

Available-for-sale securities 18 3,616,130 3,321,596

Pledged deposits 23 206,488 158,915

Loans and advances and other assets 19 117,335 129,352

Securities measured at fair value through profit or loss 20 1,736,186 1,524,770

Insurance receivables 21 225,162 197,465

Reinsurance assets 22 1,211,355 583,379

Cash and cash equivalents 23 2,627,224 2,433,390

11,877,662 10,259,709

Assets of a disposal group classified as held for sale 12 105,084 –

Total assets 11,982,746 10,259,709

…cont’d



31st December, 2017

Notes 2017 2016

HK$’000 HK$’000

EQUITY AND LIABILITIES

Equity attributable to equity holders of the Company

Issued capital 24 978,478 978,478

Reserves 25 6,920,986 6,004,220

Proposed final dividend 10 73,386 53,816

7,972,850 7,036,514

Reserve of a disposal group classified as held for sale 12 3,595 –

7,976,445 7,036,514

Non-controlling interests 45,689 43,090

Total equity 8,022,134 7,079,604

Liabilities

Insurance contracts liabilities 26 3,187,781 2,496,596

Insurance payables 181,949 157,233

Due to a joint venture 15 28,099 25,055

Due to associates 16 4,222 4,222

Other liabilities 29 348,521 281,111

Interest-bearing bank borrowing 30 150,000 150,000

Tax payable 46,414 53,649

Deferred tax liabilities 31 13,626 12,239

Total liabilities 3,960,612 3,180,105

Total equity and liabilities 11,982,746 10,259,709

CHAN Yau Hing Robin CHAN Bernard Charnwut

Chairman Executive Director & President

Consolidated Statement of Changes in Equity





Attributable to equity holders of the Company

Available-

Share for-sale Asset Capital Proposed Non-

Issued premium Contingency investment revaluation Exchange Statutory Capital redemption Retained final controlling

capital account reserve reserve reserve reserve reserve reserve reserve profits dividend Total interests Total

HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000(note 25)

At 1st January, 2016 1,019,200 560,531 64,436 1,232,943 56,120 12,425 2,427 513,240 38,821 3,509,282 10,192 7,019,617 40,312 7,059,929

Profit for the year – – – – – – – – – 367,271 – 367,271 1,767 369,038

Other comprehensive income/(expense)

for the year:

Changes in fair value of available-for-

sale securities (note 18) – – – (107,849) – – – – – – – (107,849) – (107,849)

Share of other comprehensive income

of joint ventures (note 15) – – – 2,733 – 245 – – – – – 2,978 – 2,978

Share of other comprehensive

income/(expense) of associates

(note 16) – – – 2,351 – (30,675) – – – – – (28,324) 1,011 (27,313)

Exchange differences on translation

of foreign operations – – – – – 63 – – – – – 63 – 63

Total comprehensive income/(expense)

for the year – – – (102,765) – (30,367) – – – 367,271 – 234,139 2,778 236,917

Final 2015 dividend declared – – – – – – – – – 86 (10,192) (10,106) – (10,106)

Interim 2016 dividend – – – – – – – – – (24,557) – (24,557) – (24,557)

Proposed final 2016 dividend (note 10) – – – – – – – – – (53,816) 53,816 – – –

Repurchase of shares (note 24) (40,722) – – – – – – – – (141,857) – (182,579) – (182,579)

Transfer to capital redemption

reserve (note 24) – – – – – – – – 40,722 (40,722) – – – –

Transfer to contingency reserve – – 16,353 – – – – – – (16,353) – – – –

Release from contingency reserve – – (9,175) – – – – – – 9,175 – – – –

Share of changes in contingency

reserve of a joint venture – – 163 – – – – – – (163) – – – –

At 31st December, 2016 978,478 560,531* 71,777* 1,130,178* 56,120* (17,942)* 2,427* 513,240* 79,543* 3,608,346* 53,816 7,036,514 43,090 7,079,604

…cont’d




Attributable to equity holders of the Company

Available Reserve of

Share for-sale Asset Capital Proposed a disposal Non-

Issued premium Contingency investment revaluation Exchange Statutory Capital redemption Retained final group controlling

capital account reserve reserve reserve reserve reserve reserve reserve profits dividend held for sale Total interests Total

HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000(note 25)

At 1st January, 2017 978,478 560,531 71,777 1,130,178 56,120 (17,942) 2,427 513,240 79,543 3,608,346 53,816 – 7,036,514 43,090 7,079,604

Profit for the period – – – – – – – – – 468,187 – – 468,187 1,693 469,880

Other comprehensive income

for the year:

Investment revaluation reserve arising from

changes in fair value of available-for-sale

securities and reclassification adjustment for

gain on disposal – – – 444,399 – – – – – – – – 444,399 – 444,399


income of joint ventures (note 15) – – – 1,933 – 3,426 – – – – – – 5,359 – 5,359


income of associates (note 16) – – – 2,209 – 27,168 – – – – – – 29,377 906 30,283

Exchange differences on translation

of foreign operations – – – – – 114 – – – – – – 114 – 114

Gain on property valuation (note 13) – – – – 85,450 – – – – – – – 85,450 – 85,450

Total comprehensive income for the year – – – 448,541 85,450 30,708 – – – 468,187 – – 1,032,886 2,599 1,035,485

Final 2016 dividend declared (note 10) – – – – – – – – – – (53,816) – (53,816) – (53,816)

Interim 2017 dividend (note 10) – – – – – – – – – (39,139) – – (39,139) – (39,139)

Proposed final 2017 dividend (note 10) – – – – – – – – – (73,386) 73,386 – – – –

Transfer to contingency reserve – – 16,820 – – – – – – (16,820) – – – – –

Release from contingency reserve – – (16,140) – – – – – – 16,140 – – – – –

Share of changes in contingency

reserve of a joint venture – – 166 – – – – – – (166) – – – – –

Reclassification for a disposal group

classified as held for sale – – – (3,595) – – – – – – – 3,595 – – –

At 31st December, 2017 978,478 560,531* 72,623* 1,575,124* 141,570* 12,766* 2,427* 513,240* 79,543* 3,963,162* 73,386 3,595 7,976,445 45,689 8,022,134

* These reserve accounts comprise the consolidated reserves of HK$6,920,986,000 (2016: HK$6,004,220,000) in the consolidated

statement of financial position.

Consolidated Statement of Cash Flows





Notes 2017 2016

HK$’000 HK$’000

CASH FLOWS FROM OPERATING ACTIVITIES

Profit before tax 504,032 400,894

Adjustments for:

Interest income 6 (65,885) (60,576)

Finance costs 5 3,170 2,761

Dividend income from investments 6 (114,114) (135,994)

Loss on redemption/call-back of held-to-maturity securities 6 88 80

Gain on disposal of available-for-sale securities 6 (52,238) (115)

Depreciation 6 15,068 15,563

Changes in fair value of investment properties 6 (6,000) (5,100)

Loss/(gain) on disposal/write-off of items of property,

plant and equipment 6 7,390 (58)

Share of profits and losses of joint ventures (48,246) (36,857)

Share of profits and losses of associates (19,310) (76,558)

223,955 104,040

Decrease/(increase) in loans and advances and other assets 12,017 (36,410)

Decrease/(increase) in securities measured

at fair value through profit or loss (211,416) 328,926

Decrease/(increase) in insurance receivables (27,697) 4,157

Increase in reinsurance assets (627,976) (16,181)

Decrease in time deposits with original maturity of over three months 4,566 223,485

Increase in insurance contracts liabilities 691,185 40,848

Increase in insurance payables 24,716 2,910

Increase/(decrease) in other liabilities (50,809) 6,097

Cash generated from operations 38,541 657,872

Hong Kong profits tax paid (34,946) (89)

Overseas taxes paid (5,054) (4,157)

Net cash flows from/(used in) operating activities (1,459) 653,626

…cont’d




Notes 2017 2016

HK$’000 HK$’000

Net cash flows from/(used in) operating activities (1,459) 653,626

CASH FLOWS FROM INVESTING ACTIVITIES

Interest received 65,885 60,576

Dividends received from investments 114,114 135,994

Dividends received from joint ventures 15 19,891 17,450

Dividends received from associates 16 5,714 5,878

Purchases of held-to-maturity securities (151,913) (83,275)

Purchases of available-for-sale securities (1,024) (2,730)

Proceeds from redemption/call back of held-to-maturity securities 78,236 19,112

Proceeds from disposal of available-for-sale securities 203,127 115

Purchases of items of property, plant and equipment 13 (25,154) (26,980)

Proceeds from disposal of items of property, plant and equipment 1,183 250

Capital contribution to associates (35,004) (310)

Advances of loans to a joint venture – (29,000)

Repayment of a loan to a joint venture 2,500 5,835

Increase in an amount due to a joint venture 3,044 523

Increase in amounts due from associates (55,375) (32,375)

Increase in pledged deposits (47,573) (10,679)

Deposit received for a proposed disposal 12 118,333 –

Net cash flows from investing activities 295,984 60,384

CASH FLOWS FROM FINANCING ACTIVITIES

Repurchase of shares – (182,579)

Dividends paid (92,955) (34,663)

Interest paid (3,170) (2,761)

Net cash flows used in financing activities (96,125) (220,003)

NET INCREASE IN CASH AND CASH EQUIVALENTS 198,400 494,007

Cash and cash equivalents at beginning of year 2,218,027 1,724,020

CASH AND CASH EQUIVALENTS AT END OF YEAR 2,416,427 2,218,027

…cont’d




Notes 2017 2016

HK$’000 HK$’000

ANALYSIS OF BALANCES OF CASH AND CASH EQUIVALENTS

Cash and bank balances 23 182,880 168,772

Non-pledged time deposits with original maturity of

over three months when acquired 23 210,797 215,363

Non-pledged time deposits with original maturity of

less than three months when acquired 23 2,233,547 2,049,255

Cash and cash equivalents as stated in

the consolidated statement of financial position 2,627,224 2,433,390

Less: Non-pledged time deposits with original maturity of

over three months when acquired (210,797) (215,363)

Cash and cash equivalents as stated in the

consolidated statement of cash flows 2,416,427 2,218,027

Notes to Financial Statements

31st December, 2017



31st December, 2017

1. Corporate and Group InformationAsia Financial Holdings Limited is a limited liability company incorporated in Bermuda and its shares are listed on

The Stock Exchange of Hong Kong Limited (the “Stock Exchange”). The registered office of the Company is located

at Clarendon House, Church Street, Hamilton HM 11, Bermuda and its principal place of business in Hong Kong is

located at 16th Floor, Worldwide House, 19 Des Voeux Road Central, Hong Kong.

The principal activities of the Group comprise the provision of underwriting of general and life insurance. There were

no significant changes in the nature of the Group’s principal activities during the year. Particulars of the Company’s

principal subsidiaries are detailed in note 39 to the financial statements.

In the opinion of the directors, the holding company and the ultimate holding company of the Company is Claremont

Capital Holdings Ltd, which was incorporated in the British Virgin Islands.

2.1 Basis of PreparationThese financial statements have been prepared in accordance with Hong Kong Financial Reporting Standards

(“HKFRSs”) (which include all Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards

(“HKASs”) and Interpretations) issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”),

accounting principles generally accepted in Hong Kong and the disclosure requirements of the Hong Kong

Companies Ordinance. They have been prepared under the historical cost convention, except for investment

properties, securities measured at fair value through profit or loss and certain available-for-sale securities which have

been measured at fair value, and certain buildings classified as property, plant and equipment which were carried at

1990 valuation. Disposal groups held for sale are stated at the lower of their carrying amounts and fair values less

costs to sell as further explained in note 2.4. These financial statements are presented in Hong Kong dollars and all

values are rounded to the nearest thousand except when otherwise indicated.

Basis of consolidation

The consolidated financial statements include the financial statements of the Company and its subsidiaries

(collectively referred to as the “Group”) for the year ended 31st December, 2017. A subsidiary is an entity (including

a structured entity), directly or indirectly, controlled by the Company. Control is achieved when the Group is exposed,

or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns

through its power over the investee (i.e., existing rights that give the Group the current ability to direct the relevant

activities of the investee).



31st December, 2017

2.1 Basis of Preparation (cont’d)Basis of consolidation (cont’d)

When the Company has, directly or indirectly, less than a majority of the voting or similar rights of an investee, the

Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

(a) the contractual arrangement with the other vote holders of the investee;

(b) rights arising from other contractual arrangements; and

(c) the Group’s voting rights and potential voting rights.

The financial statements of the subsidiaries are prepared for the same reporting period as the Company using

consistent accounting policies. The results of subsidiaries are consolidated from the date on which the Group obtains

control, and continue to be consolidated until the date that such control ceases.

Profit or loss and each component of other comprehensive income are attributed to the equity holders of the

Company and to the non-controlling interests, even if this results in the non-controlling interests having a deficit

balance. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions

between members of the Group are eliminated on consolidation.

The Group reassesses whether or not it controls an investee if facts and circumstances indicate that there are

changes to one or more of the three elements of control described above. A change in the ownership interest of a

subsidiary, without a loss of control, is accounted for as an equity transaction.

If the Group loses control over a subsidiary, it derecognises (i) the assets (including goodwill) and liabilities of the

subsidiary, (ii) the carrying amount of any non-controlling interest and (iii) the cumulative translation differences

recorded in equity; and recognises (i) the fair value of the consideration received, (ii) the fair value of any investment

retained and (iii) any resulting surplus or deficit in profit or loss. The Group’s share of components previously

recognised in other comprehensive income is reclassified to profit or loss or retained profits, as appropriate, on the

same basis as would be required if the Group had directly disposed of the related assets or liabilities.

2.2 Changes in Accounting Policies and DisclosuresThe Group has adopted the following revised HKFRSs for the first time for the current year’s financial statements.

Amendments to HKAS 7 Disclosure Initiative

Amendments to HKAS 12 Recognition of Deferred Tax Assets for Unrealised Losses

Amendments to HKFRS 12

included in Annual

Improvements to HKFRSs

2014-2016 Cycle

Disclosure of Interests in Other Entities: Clarification of the

Scope of HKFRS 12

Other than as explained below regarding the impact of amendments to HKAS 7 and HKFRS 12, the adoption of the

above revised standards has had no significant financial effect on these financial statements.



31st December, 2017

2.2 Changes in Accounting Policies and Disclosures (cont’d)Amendments to HKAS 7 require an entity to provide disclosures that enable users of financial statements to evaluate

changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash

changes. Disclosure of the changes in liabilities arising from financing activities is provided in note 32 to the financial

statements.

Amendments to HKFRS 12 clarify that the disclosure requirements in HKFRS 12, other than those disclosure

requirements in paragraphs B10 to B16 of HKFRS 12, apply to an entity’s interest in a subsidiary, a joint venture or

an associate, or a portion of its interest in a joint venture or an associate that is classified as held for sale or included

in a disposal group classified as held for sale. Disclosure for the Group’s joint venture classified as a disposal group

held for sale is provided in note 12 to the financial statements.

2.3 Issued but not yet Effective Hong Kong Financial Reporting StandardsThe Group has not applied the following new and revised HKFRSs, that have been issued but are not yet effective, in

these financial statements:

Amendments to HKFRS 2 Classification and Measurement of Share-based Payment Transactions1

Amendments to HKFRS 4 Applying HKFRS 9 Financial Instruments with HKFRS 4 Insurance Contracts1

HKFRS 9 Financial Instruments 1

Amendments to HKFRS 9 Prepayment Features with Negative Compensation2

Amendments to HKFRS 10 and

HKAS 28 (2011)

Sale or Contribution of Assets between an Investor and its Associate or Joint

Venture 4

HKFRS 15 Revenue from Contracts with Customers1

Amendments to HKFRS 15 Clarifications to HKFRS 15 Revenue from Contracts with Customers1

HKFRS 16 Leases 2

HKFRS 17 Insurance Contracts 3

Amendments to HKAS 28 Long-term Interests in Associates and Joint Ventures2

Amendments to HKAS 40 Transfers of Investment Property1

HK(IFRIC)-Int 22 Foreign Currency Transactions and Advance Consideration1

HK(IFRIC)-Int 23 Uncertainty over Income Tax Treatments2

Annual Improvements

2014-2016 Cycle

Amendments to HKFRS 1 and HKAS 281

Annual Improvements

2015-2017 Cycle

Amendments to a number of HKFRSs2

1 Effective for annual periods beginning on or after 1st January, 20182 Effective for annual periods beginning on or after 1st January, 20193 Effective for annual periods beginning on or after 1st January, 20214 No mandatory effective date yet determined but available for adoption



31st December, 2017

2.3 Issued but not yet Effective Hong Kong Financial Reporting Standards (cont’d)Further information about those HKFRSs that are expected to be applicable to the Group is described below. Of

those standards, HKFRS 9 will be applicable for the Group’s financial year ending 31st December, 2018 and is

expected to have a significant impact upon adoption. Whilst management has performed a detailed assessment of

the estimated impacts of the standard, that assessment is based on the information currently available to the Group,

including expectations of the application of transitional provision options and policy choices. The actual impacts

upon adoption could be different to those below, depending on additional reasonable and supportable information

being made available to the Group at the time of applying the standard and the transitional provisions and policy

options finally adopted.

Amendments to HKFRS 4, issued in January 2017, address issues arising from the different effective dates of

HKFRS 9 and HKFRS 17. The amendments introduce two options for entities issuing contracts within the scope of

HKFRS 4 upon adoption of HKFRS 9 and before the implementation of HKFRS 7, notably a temporary exemption

and an overlay approach. The temporary exemption enables entities whose activities are predominantly connected

with insurance to defer the implementation date of HKFRS 9. The overlay approach allows entities applying HKFRS

9 to remove from profit or loss the effects arising from the adoption of HKFRS 9 and reclassify the amounts to other

comprehensive income for designated financial assets. The amendments are not applicable to the Group.

In September 2014, the HKICPA issued the final version of HKFRS 9, bringing together all phases of the financial

instruments project to replace HKAS 39 and all previous versions of HKFRS 9. The standard introduces new

requirements for classification and measurement, impairment and hedge accounting. The Group will adopt HKFRS

9 from 1st January, 2018. The Group will not restate comparative information and will recognise any transition

adjustments against the opening balance of equity at 1st January, 2018. During 2017, the Group has performed a

detailed assessment of the impact of the adoption of HKFRS 9. The expected impacts are summarised as follows:

Upon adoption of HKFRS 9, the classification and measurement of financial assets depends on two assessments:

the financial asset’s contractual cash flow characteristics and the entity’s business model for managing the financial

asset. The Group expects to continue measuring at fair value all financial assets currently held at fair value.

Equity investments of HK$1,592,807,000 as at 31st December, 2017, that are currently held as available for sale

at cost less impairment, will be measured at fair value through other comprehensive income as the investments

are intended to be held for the foreseeable future and the Group expects to apply the option to present fair value

changes in other comprehensive income. Gains and losses recorded in other comprehensive income for the equity

investments cannot be recycled to profit or loss when the investments are derecognised. Accordingly, the carrying

amount of these equity investments will increase by HK$2,223,457,000 with a corresponding related increase in

reserve and deferred tax liabilities of HK$2,008,039,000 and HK$215,418,000, respectively, upon the initial adoption

of the standard.



31st December, 2017

2.3 Issued but not yet Effective Hong Kong Financial Reporting Standards (cont’d)Amendments to HKFRS 10 and HKAS 28 (2011) address an inconsistency between the requirements in HKFRS

10 and in HKAS 28 (2011) in dealing with the sale or contribution of assets between an investor and its associate

or joint venture. The amendments require a full recognition of a gain or loss when the sale or contribution of assets

between an investor and its associate or joint venture constitutes a business. For a transaction involving assets that

do not constitute a business, a gain or loss resulting from the transaction is recognised in the investor’s profit or loss

only to the extent of the unrelated investor’s interest in that associate or joint venture. The amendments are to be

applied prospectively. The previous mandatory effective date of amendments to HKFRS 10 and HKAS 28 (2011) was

removed by the HKICPA in January 2016 and a new mandatory effective date will be determined after the completion

of a broader review of accounting for associates and joint ventures. However, the amendments are available for

adoption now.

HKFRS 15, issued in July 2014, establishes a five-step model to account for revenue arising from contracts with

customers. Under HKFRS 15, revenue is recognised at an amount that reflects the consideration to which an entity

expects to be entitled in exchange for transferring goods or services to a customer. The new revenue standard will

supersede all current revenue recognition requirements under HKFRSs. Either a full retrospective application or a

modified retrospective application is required on the initial application of the standard. The Group will adopt HKFRS

15 from 1st January, 2018 and plan to adopt the modified retrospective application for revenue other than those

generated from insurance contracts which are scoped out. The standard is not expected to have any significant

impact on the Group’s financial statements.

HKFRS 17, issued in January 2018, provides a comprehensive new accounting standard for insurance contracts

covering recognition and measurement, presentation and disclosure, which replaces HKFRS 4 Insurance Contracts .

In contrast to the requirements in HKFRS 4, which are largely based on grandfathering previous local accounting

policies for measurement purposes, HKFRS 17 provides a comprehensive model (the general model) for insurance

contracts, supplemented by the variable fee approach for contracts with direct participation features that are

substantially investment-related service contracts, and the premium allocation approach mainly for short-duration

which typically applies to certain non-life insurance contracts.

The main features of the new accounting model for insurance contracts are, as follows:

• The measurement of the present value of future cash flows, incorporating an explicit risk adjustment,

remeasured every reporting period (the fulfilment cash flows)

• A Contractual Service Margin (CSM) that is equal and opposite to any day one gain in the fulfilment cash

flows of a group of contracts. The CSM represents the unearned profitability of the insurance contracts and is

recognised in profit or loss over the service period (i.e., coverage period)

• Certain changes in the expected present value of future cash flows are adjusted against the CSM and thereby

recognised in profit or loss over the remaining contractual service period

• The effect of changes in discount rates will be reported in either profit or loss or other comprehensive income,

determined by an accounting policy choice



31st December, 2017

2.3 Issued but not yet Effective Hong Kong Financial Reporting Standards (cont’d)• The recognition of insurance revenue and insurance service expenses in the statement of comprehensive

income based on the concept of services provided during the period

• Amounts that the policyholder will always receive, regardless of whether an insured event happens (non-

distinct investment components) are not presented in the statement of profit or loss, but are recognised

directly on the statement of financial position

• Insurance services results (earned revenue less incurred claims) are presented separately from the insurance

finance income or expense

• Extensive disclosures to provide information on the recognised amounts from insurance contracts and the

nature and extent of risks arising from these contracts

HKFRS 17 is effective for annual reporting periods beginning on or after 1st January, 2021, with comparative figures

required. Early application is permitted, provided the entity also applies HKFRS 9 and HKFRS 15 on or before the

date it first applies HKFRS 17. Retrospective application is required. However, if full retrospective application for a

group of insurance contracts is impracticable, then the entity is required to choose either a modified retrospective

approach or a fair value approach. The Group plans to adopt the new standard for the annual reporting period

beginning on 1st January, 2021. The Group expects that the new standard will result in an important change to the

accounting policies for insurance contracts liabilities of the Group and is likely to have a significant impact on profit

and total equity together with presentation and disclosure.

2.4 Summary of Significant Accounting PoliciesRevenue recognition

Revenue is recognised when it is probable that the economic benefits will flow to the Group and when the revenue

can be measured reliably, on the following bases:

(i) interest income, on an accrual basis using the effective interest rate method by applying the rate that

discounts the estimated future cash receipts over the expected life of the financial instrument or a shorter

period, when appropriate, to the net carrying amount of the financial asset;

(ii) fees and commission income, when services are rendered;

(iii) premiums from direct underwriting and reinsurance businesses, based on insurance policy contracts

incepted and advices received from the cedants during the financial year, respectively, and are recognised as

income when risk coverage is provided to the insured or the cedants;

(iv) rental income, on a time proportion basis over the lease terms; and

(v) dividend income, when the shareholder’s right to receive payment has been established.



31st December, 2017

2.4 Summary of Significant Accounting Policies (cont’d)Commission expenses and other acquisition costs

Commission expenses and other acquisition costs relating to the underwriting business are not deferred and are

charged to the statement of profit or loss as incurred.

Investments in associates and joint ventures

An associate is an entity in which the Group has a long term interest of generally not less than 20% of the equity

voting rights and over which it is in a position to exercise significant influence. Significant influence is the power to

participate in the financial and operating policy decisions of the investee, but is not control or joint control over those

policies.

A joint venture is a type of joint arrangement whereby the parties that have joint control of the arrangement have

rights to the net assets of the joint venture. Joint control is the contractually agreed sharing of control of an

arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the

parties sharing control.

The Group’s interests in associates and joint ventures are stated in the consolidated statement of financial position at

the Group’s share of net assets under the equity method of accounting, less any impairment losses. Adjustments are

made to bring into line any dissimilar accounting policies that may exist. The Group’s share of the post-acquisition

results and other comprehensive income of associates and joint ventures is included in the consolidated statement

of profit or loss and consolidated other comprehensive income, respectively. In addition, when there has been a

change recognised directly in the equity of the associate or joint venture, the Group recognises its share of any

changes, when applicable, in the consolidated statement of changes in equity. Unrealised gains and losses resulting

from transactions between the Group and its associates or joint ventures are eliminated to the extent of the Group’s

interests in the associates or joint ventures, except where unrealised losses provide evidence of an impairment of

the assets transferred. Goodwill arising from the acquisition of associates or joint ventures is included as part of the

Group’s interests in associates or joint ventures and is not individually tested for impairment.

If an investment in an associate becomes an investment in a joint venture or vice versa, the retained interest is not

remeasured. Instead, the investment continues to be accounted for under the equity method. In all other cases,

upon loss of significant influence over the associate or joint control over the joint venture, the Group measures and

recognises any retained investment at its fair value. Any difference between the carrying amount of the associate

or joint venture upon loss of significant influence or joint control and the fair value of the retained investment and

proceeds from disposal is recognised in profit or loss.

When an investment in an associate or a joint venture is classified as held for sale, it is accounted for in accordance

with HKFRS 5 Non-current Assets Held for Sale and Discontinued Operations.



31st December, 2017

2.4 Summary of Significant Accounting Policies (cont’d)Business combinations and goodwill

Business combinations are accounted for using the acquisition method. The consideration transferred is measured at

the acquisition date fair value which is the sum of the acquisition date fair values of assets transferred by the Group,

liabilities assumed by the Group to the former owners of the acquiree and the equity interests issued by the Group in

exchange for control of the acquiree. For each business combination, the Group elects whether to measure the non-

controlling interests in the acquiree that are present ownership interests and entitle their holders to a proportionate

share of net assets in the event of liquidation at fair value or at the proportionate share of the acquiree’s identifiable

net assets. All other components of non-controlling interests are measured at fair value. Acquisition-related costs are

expensed as incurred.

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate

classification and designation in accordance with the contractual terms, economic circumstances and pertinent

conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts of the

acquiree.

If the business combination is achieved in stages, the previously held equity interest is remeasured at its acquisition

date fair value and any resulting gain or loss is recognised in profit or loss.

Any contingent consideration to be transferred by the acquirer is recognised at fair value at the acquisition date.

Contingent consideration classified as an asset or liability is measured at fair value with changes in fair value

recognised in profit or loss. Contingent consideration that is classified as equity is not remeasured and subsequent

settlement is accounted for within equity.

Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred, the amount

recognised for non-controlling interests and any fair value of the Group’s previously held equity interests in the

acquiree over the identifiable net assets acquired and liabilities assumed. If the sum of this consideration and other

items is lower than the fair value of the net assets acquired, the difference is, after reassessment, recognised in profit

or loss as a gain on bargain purchase.

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is tested

for impairment annually or more frequently if events or changes in circumstances indicate that the carrying value

may be impaired. The Group performs its annual impairment test of goodwill as at 31st December. For the purpose

of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each

of the Group’s cash-generating units, or groups of cash-generating units, that are expected to benefit from the

synergies of the combination, irrespective of whether other assets or liabilities of the Group are assigned to those

units or groups of units.

Impairment is determined by assessing the recoverable amount of the cash-generating unit (group of cash-

generating units) to which the goodwill relates. Where the recoverable amount of the cash-generating unit (group

of cash-generating units) is less than the carrying amount, an impairment loss is recognised. An impairment loss

recognised for goodwill is not reversed in a subsequent period.

Where goodwill has been allocated to a cash-generating unit (or group of cash-generating units) and part of the

operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the

carrying amount of the operation when determining the gain or loss on the disposal. Goodwill disposed of in these

circumstances is measured based on the relative value of the operation disposed of and the portion of the cash-

generating unit retained.



31st December, 2017

2.4 Summary of Significant Accounting Policies (cont’d)Fair value measurement

The Group measures its investment properties, securities measured at fair value through profit or loss and certain

available-for-sale securities at fair value at the end of each reporting period. Fair value is the price that would be

received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the

measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or

transfer the liability takes place either in the principal market for the asset or liability, or in the absence of a principal

market, in the most advantageous market for the asset or liability. The principal or the most advantageous market

must be accessible by the Group. The fair value of an asset or a liability is measured using the assumptions that

market participants would use when pricing the asset or liability, assuming that market participants act in their

economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate

economic benefits by using the asset in its highest and best use or by selling it to another market participant that

would use the asset in its highest and best use.

The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data

are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of

unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised

within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value

measurement as a whole:

Level 1 – based on quoted prices (unadjusted) in active markets for identical assets or liabilities

Level 2 – based on valuation techniques for which the lowest level input that is significant to the fair value

measurement is observable, either directly or indirectly

Level 3 – based on valuation techniques for which the lowest level input that is significant to the fair value

measurement is unobservable

For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group determines

whether transfers have occurred between levels in the hierarchy by reassessing categorisation (based on the lowest

level input that is significant to the fair value measurement as a whole) at the end of each reporting period.



31st December, 2017

2.4 Summary of Significant Accounting Policies (cont’d)Impairment of non-financial assets

Where an indication of impairment exists, or when annual impairment testing for an asset is required (other than

financial assets, reinsurance assets, investment properties and a disposal group classified as held for sale), the

asset’s recoverable amount is estimated. An asset’s recoverable amount is the higher of the asset’s or cash-

generating unit’s value in use and its fair value less costs of disposal, and is determined for an individual asset,

unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of

assets, in which case the recoverable amount is determined for the cash-generating unit to which the asset belongs.

An impairment loss is recognised only if the carrying amount of an asset exceeds its recoverable amount. In

assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax

discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

An impairment loss is charged to the statement of profit or loss in the period in which it arises in those expense

categories consistent with the function of the impaired asset.

An assessment is made at the end of each reporting period as to whether there is an indication that previously

recognised impairment losses may no longer exist or may have decreased. If such an indication exists, the

recoverable amount is estimated. A previously recognised impairment loss of an asset other than goodwill

and certain financial assets is reversed only if there has been a change in the estimates used to determine the

recoverable amount of that asset, but not to an amount higher than the carrying amount that would have been

determined (net of any depreciation/amortisation) had no impairment loss been recognised for the asset in prior

years. A reversal of such an impairment loss is credited to the statement of profit or loss in the period in which

it arises unless the asset is carried at a revalued amount, in which case the reversal of the impairment loss is

accounted for in accordance with the relevant accounting policy for that revalued asset.

Property, plant and equipment and depreciation

Property, plant and equipment are stated at cost or valuation less accumulated depreciation and any impairment

losses. When an item of property, plant and equipment is classified as held for sale or when it is part of a disposal

group classified as held for sale, it is not depreciated and is accounted for in accordance with HKFRS 5, as further

explained in the accounting policy for “Non-current assets and disposal groups held for sale”. The cost of an item of

property, plant and equipment comprises its purchase price and any directly attributable costs of bringing the asset

to its working condition and location for its intended use.

Expenditure incurred after items of property, plant and equipment have been put into operation, such as repairs and

maintenance, is normally charged to the statement of profit or loss in the period in which it is incurred. In situations

where the recognition criteria are satisfied, the expenditure for a major inspection is capitalised in the carrying

amount of the asset as a replacement. Where significant parts of property, plant and equipment are required to be

replaced at intervals, the Group recognises such parts as individual assets with specific useful lives and depreciates

them accordingly.

Advantage has been taken of the transitional provision set out in paragraph 80A of HKAS 16 Property, Plant and

Equipment , which grants an exemption from the requirement to continue making revaluations of the premises of the

Group subsequent to 1995 and, accordingly, no revaluation of these premises has been carried out since then.



31st December, 2017

2.4 Summary of Significant Accounting Policies (cont’d)Property, plant and equipment and depreciation (cont’d)

Land and buildings with residual lease periods of not more than 50 years are depreciated in equal annual instalments

over the terms of leases excluding any renewal period. Buildings with residual lease periods of more than 50 years

are depreciated on a straight-line basis at 2% per annum.

Furniture, fixtures, equipment, yacht and motor vehicles are depreciated to write off the cost of each asset over their

estimated useful lives of 3 to 10 years.

Where parts of an item of property, plant and equipment have different useful lives, the cost of that item is allocated

on a reasonable basis among the parts and each part is depreciated separately.

Residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at least at each

financial year end.

An item of property, plant and equipment including any significant part initially recognised is derecognised upon

disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss on disposal or

retirement recognised in the statement of profit or loss in the year the asset is derecognised is the difference between

the net sale proceeds and the carrying amount of the relevant asset. On disposal or retirement, any attributable

revaluation surplus realised in respect of previous valuations is transferred directly to retained profits as a reserve

movement.

Investment properties

Investment properties are interests in land and buildings held to earn rental income and/or for capital appreciation,

rather than for use in the production or supply of goods or services or for administrative purposes; or for sale in the

ordinary course of business. Such properties are measured initially at cost, including transaction costs. Subsequent

to initial recognition, investment properties are stated at fair value, which reflects market conditions at the end of the

reporting period.

Gains or losses arising from changes in the fair values of investment properties are included in the statement of profit

or loss in the year in which they arise.

Any gains or losses on the retirement or disposal of an investment property are recognised in the statement of profit

or loss in the year of the retirement or disposal.

For a transfer from investment properties to owner-occupied properties, the deemed cost of a property for

subsequent accounting is its fair value at the date of change in use. If a property occupied by the Group as an

owner-occupied property becomes an investment property, the Group accounts for such property in accordance

with the policy stated under “Property, plant and equipment and depreciation” up to the date of change in use, and

any difference at that date between the carrying amount and the fair value of the property is dealt with as movements

in the asset revaluation reserve.



31st December, 2017

2.4 Summary of Significant Accounting Policies (cont’d)Non-current assets and disposal groups held for sale

Non-current assets and disposal groups are classified as held for sale if their carrying amounts will be recovered

principally through a sales transaction rather than through continuing use. For this to be the case, the asset or

disposal group must be available for immediate sale in its present condition subject only to terms that are usual

and customary for the sale of such assets or disposal groups and its sale must be highly probable. All assets and

liabilities of a subsidiary classified as a disposal group are reclassified as held for sale regardless of whether the

Group retains a non-controlling interest in its former subsidiary after the sale.

Non-current assets and disposal groups (other than investment properties and financial assets) classified as held

for sale are measured at the lower of their carrying amounts and fair values less costs to sell. Property, plant and

equipment classified as held for sale are not depreciated or amortised.

Leases

Leases that transfer substantially all the rewards and risks of ownership of assets to the Group, other than legal title,

are accounted for as finance leases. At the inception of a finance lease, the cost of the leased asset is capitalised at

the present value of the minimum lease payments and recorded together with the obligation, excluding the interest

element, to reflect the purchase and financing. Assets held under capitalised finance leases, including prepaid land

lease payments under finance leases, are included in property, plant and equipment, and depreciated over the

shorter of the lease terms and the estimated useful lives of the assets. The finance costs of such leases are charged

to the statement of profit or loss so as to provide a constant periodic rate of charge over the lease terms.

Leases where substantially all the rewards and risks of ownership of assets remain with the lessor are accounted for

as operating leases. Where the Group is the lessor, assets leased by the Group under operating leases are included

in non-current assets and rentals receivable under the operating leases are credited to the statement of profit or loss

on the straight-line basis over the lease terms. Where the Group is the lessee, rentals payable under operating leases

are charged to the statement of profit or loss on the straight-line basis over the lease terms.

Prepaid land lease payments under operating leases are initially stated at cost and subsequently recognised on the

straight-line basis over the lease terms. When the lease payments cannot be allocated reliably between the land and

buildings elements, the entire lease payments are included in the cost of the land and buildings as a finance lease in

property, plant and equipment.

Investments and other financial assets

Initial recognition and measurement

Financial assets are classified, at initial recognition, as financial assets at fair value through profit or loss, loans and

receivables, held-to-maturity investments and available-for-sale financial investments, or as derivatives designated

as hedging instruments in an effective hedge, as appropriate. When financial assets are recognised initially, they are

measured at fair value plus transaction costs that are attributable to the acquisition of the financial assets, except in

the case of financial assets recorded at fair value through profit or loss.

All regular way purchases and sales of financial assets are recognised on the trade date, that is, the date that the

Group commits to purchase or sell the asset. Regular way purchases or sales are purchases or sales of financial

assets that require delivery of assets within the period generally established by regulation or convention in the

marketplace.



31st December, 2017

2.4 Summary of Significant Accounting Policies (cont’d)Investments and other financial assets (cont’d)

Subsequent measurement

The subsequent measurement of financial assets depends on their classification as follows:

Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss include financial assets held for trading and financial assets

designated upon initial recognition as at fair value through profit or loss. Financial assets are classified as held for

trading if they are acquired for the purpose of sale in the near term. Derivatives, including separated embedded

derivatives, are also classified as held for trading unless they are designated as effective hedging instruments as

defined by HKAS 39.

Financial assets at fair value through profit or loss are carried in the statement of financial position at fair value with

net changes in fair value recognised in the statement of profit or loss. These net fair value changes do not include

any dividends or interest earned on these financial assets, which are recognised in accordance with the policies set

out for “Revenue recognition” above.

Financial assets designated upon initial recognition as at fair value through profit or loss are designated at the date of

initial recognition and only if the criteria in HKAS 39 are satisfied.

Derivatives embedded in host contracts are accounted for as separate derivatives and recorded at fair value if their

economic characteristics and risks are not closely related to those of the host contracts and the host contracts are

not held for trading or designated as at fair value through profit or loss. These embedded derivatives are measured

at fair value with changes in fair value recognised in the statement of profit or loss. Reassessment only occurs if

there is either a change in the terms of the contract that significantly modifies the cash flows that would otherwise be

required or a reclassification of a financial asset out of the fair value through profit or loss category.

Loans and receivables

Loans and advances are non-derivative financial assets with fixed or determinable payments that are not quoted

in an active market. After initial measurement, such assets are subsequently measured at amortised cost using the

effective interest rate method less any allowance for impairment. Amortised cost is calculated by taking into account

any discount or premium on acquisition and includes fees or costs that are an integral part of the effective interest

rate. The effective interest rate amortisation is included in interest income in the statement of profit or loss. The loss

arising from impairment is recognised in the statement of profit or loss in other expenses.

Held-to-maturity investments

Non-derivative financial assets with fixed or determinable payments and fixed maturity are classified as held to

maturity when the Group has the positive intention and ability to hold them to maturity. Held-to-maturity investments

are subsequently measured at amortised cost using the effective interest rate method less any allowance for

impairment. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees

or costs that are an integral part of the effective interest rate. The effective interest rate amortisation is included in

interest income in the statement of profit or loss. The loss arising from impairment is recognised in the statement of

profit or loss in other expenses.



31st December, 2017

2.4 Summary of Significant Accounting Policies (cont’d)Investments and other financial assets (cont’d)

Available-for-sale financial investments

Available-for-sale financial investments are non-derivative financial assets in listed and unlisted equity investments

and debt securities. Equity investments classified as available for sale are those which are neither classified as held

for trading nor designated as at fair value through profit or loss. Debt securities in this category are those which are

intended to be held for an indefinite period of time and which may be sold in response to needs for liquidity or in

response to changes in market conditions.

After initial recognition, available-for-sale financial investments are subsequently measured at fair value, with

unrealised gains or losses recognised as other comprehensive income in the available-for-sale investment reserve

until the investment is derecognised, at which time the cumulative gain or loss is recognised in the statement of profit

or loss in gain or loss on investments, or until the investment is determined to be impaired, when the cumulative gain

or loss is reclassified from the available-for-sale investment reserve to the statement of profit or loss in gain or loss on

investments. Interest and dividends earned whilst holding the available-for-sale financial investments are reported as

interest income and dividend income, respectively and are recognised in the statement of profit or loss in accordance

with the policies set out for “Revenue recognition” above.

When the fair value of unlisted equity investments cannot be reliably measured because (a) the variability in the range

of reasonable fair value estimates is significant for that investment or (b) the probabilities of the various estimates

within the range cannot be reasonably assessed and used in estimating fair value, such investments are stated at

cost less any impairment losses.

The Group evaluates whether the ability and intention to sell its available-for-sale financial assets in the near term

are still appropriate. When, in rare circumstances, the Group is unable to trade these financial assets due to inactive

markets, the Group may elect to reclassify these financial assets if management has the ability and intention to hold

the assets for the foreseeable future or until maturity.

For a financial asset reclassified from the available-for-sale category, the fair value carrying amount at the date

of reclassification becomes its new amortised cost and any previous gain or loss on that asset that has been

recognised in equity is amortised to profit or loss over the remaining life of the investment using the effective interest

rate. Any difference between the new amortised cost and the maturity amount is also amortised over the remaining

life of the asset using the effective interest rate. If the asset is subsequently determined to be impaired, then the

amount recorded in equity is reclassified to the statement of profit or loss.



31st December, 2017

2.4 Summary of Significant Accounting Policies (cont’d)Impairment of financial assets

The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset

or a group of financial assets is impaired. An impairment exists if one or more events that occurred after the initial

recognition of the asset have an impact on the estimated future cash flows of the financial asset or the group of

financial assets that can be reliably estimated. Evidence of impairment may include indications that a debtor or a

group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments,

the probability that they will enter bankruptcy or other financial reorganisation and observable data indicating

that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic

conditions that correlate with defaults.

Financial assets carried at amortised cost

For financial assets carried at amortised cost, the Group first assesses whether impairment exists individually for

financial assets that are individually significant, or collectively for financial assets that are not individually significant.

If the Group determines that no objective evidence of impairment exists for an individually assessed financial asset,

whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics

and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an

impairment loss is, or continues to be, recognised are not included in a collective assessment of impairment.

The amount of any impairment loss identified is measured as the difference between the asset’s carrying amount

and the present value of estimated future cash flows (excluding future credit losses that have not been incurred). The

present value of the estimated future cash flows is discounted at the financial asset’s original effective interest rate

(i.e., the effective interest rate computed at initial recognition).

The carrying amount of the asset is reduced either directly or through the use of an allowance account and the loss

is recognised in the statement of profit or loss. Interest income continues to be accrued on the reduced carrying

amount using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment

loss. Loans and receivables together with any associated allowance are written off when there is no realistic prospect

of future recovery and all collateral has been realised or has been transferred to the Group.

If, in a subsequent period, the amount of the estimated impairment loss increases or decreases because of an event

occurring after the impairment was recognised, the previously recognised impairment loss is increased or reduced by

adjusting the allowance account. If a write-off is later recovered, the recovery is credited to the statement of profit or

loss.

Assets carried at cost

If there is objective evidence that an impairment loss has been incurred on an unquoted equity instrument that is

not carried at fair value because its fair value cannot be reliably measured or on a derivative asset that is linked to

and must be settled by delivery of such an unquoted equity instrument, the amount of the loss is measured as the

difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at

the current market rate of return for a similar financial asset. Impairment losses on these assets are not reversed.



31st December, 2017

2.4 Summary of Significant Accounting Policies (cont’d)Impairment of financial assets (cont’d)

Available-for-sale financial investments

For available-for-sale financial investments, the Group assesses at the end of each reporting period whether there is

objective evidence that an investment or a group of investments is impaired.

If an available-for-sale asset is impaired, an amount comprising the difference between its cost (net of any principal

payment and amortisation) and its current fair value, less any impairment loss previously recognised in the statement

of profit or loss, is removed from other comprehensive income and recognised in the statement of profit or loss.

In the case of equity investments classified as available for sale, objective evidence would include a significant or

prolonged decline in the fair value of an investment below its cost. “Significant” is evaluated against the original cost

of the investment and “prolonged” against the period in which the fair value has been below its original cost. Where

there is evidence of impairment, the cumulative loss – measured as the difference between the acquisition cost and

the current fair value, less any impairment loss on that investment previously recognised in the statement of profit or

loss – is removed from other comprehensive income and recognised in the statement of profit or loss. Impairment

losses on equity instruments classified as available for sale are not reversed through the statement of profit or loss.

Increases in their fair value after impairment are recognised directly in other comprehensive income.

The determination of what is “significant” or “prolonged” requires judgement. In making this judgement, the Group

evaluates, among other factors, the duration or extent to which the fair value of an investment is less than its cost.

In the case of debt instruments classified as available for sale, impairment is assessed based on the same criteria

as financial assets carried at amortised cost. However, the amount recorded for impairment is the cumulative loss

measured as the difference between the amortised cost and the current fair value, less any impairment loss on that

investment previously recognised in the statement of profit or loss. Future interest income continues to be accrued

based on the reduced carrying amount of the asset using the rate of interest used to discount the future cash flows

for the purpose of measuring the impairment loss. The interest income is recorded in the statement of profit or

loss. Impairment losses on debt instruments are reversed through the statement of profit or loss if the subsequent

increase in fair value of the instruments can be objectively related to an event occurring after the impairment loss was

recognised in the statement of profit or loss.

Derecognition of financial assets

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is

primarily derecognised (i.e., removed from the Group’s consolidated statement of financial position) when:

• the rights to receive cash flows from the asset have expired; or

• the Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay

the received cash flows in full without material delay to a third party under a “pass-through” arrangement; and

either (a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has

neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control

of the asset.



31st December, 2017

2.4 Summary of Significant Accounting Policies (cont’d)Derecognition of financial assets (cont’d)

When the Group has transferred its rights to receive cash flows from an asset or has entered into a pass-through

arrangement, it evaluates if and to what extent it has retained the risk and rewards of ownership of the asset. When

it has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the

asset, the Group continues to recognise the transferred asset to the extent of the Group’s continuing involvement.

In that case, the Group also recognises an associated liability. The transferred asset and the associated liability are

measured on a basis that reflects the rights and obligations that the Group has retained.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the

original carrying amount of the asset and the maximum amount of consideration that the Group could be required to

repay.

Financial liabilities

Initial recognition and measurement

Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans

and borrowings, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.

All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings, net of directly

attributable transaction costs.

The Group’s financial liabilities include other liabilities, amounts due to a joint venture and associates, insurance

payables and interest-bearing bank borrowing.

Subsequent measurement

The subsequent measurement of financial liabilities depends on their classification as follows:

Loans and borrowings

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost, using

the effective interest rate method unless the effect of discounting would be immaterial, in which case they are stated

at cost. Gains and losses are recognised in the statement of profit or loss when the liabilities are derecognised as

well as through the effective interest rate amortisation process.

Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that

are an integral part of the effective interest rate. The effective interest rate amortisation is included in finance costs in

the statement of profit or loss.

Derecognition of financial liabilities

A financial liability is derecognised when the obligation under the liability is discharged or cancelled, or expires.

When an existing financial liability is replaced by another from the same lender on substantially different terms, or the

terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition

of the original liability and a recognition of a new liability, and the difference between the respective carrying amounts

is recognised in the statement of profit or loss.



31st December, 2017

2.4 Summary of Significant Accounting Policies (cont’d)Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount is reported in the statement of financial position

if there is currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net

basis, or to realise the assets and settle the liabilities simultaneously.

Related parties

A party is considered to be related to the Group if:

(a) the party is a person or a close member of that person’s family and that person

(i) has control or joint control over the Group;

(ii) has significant influence over the Group; or

(iii) is a member of the key management personnel of the Group or of a parent of the Group;

or

(b) the party is an entity where any of the following conditions applies:

(i) the entity and the Group are members of the same group;

(ii) one entity is an associate or joint venture of the other entity (or of a parent, subsidiary or fellow

subsidiary of the other entity);

(iii) the entity and the Group are joint ventures of the same third party;

(iv) one entity is a joint venture of a third entity and the other entity is an associate of the third entity;

(v) the entity is a post-employment benefit plan for the benefit of employees of either the Group or an

entity related to the Group;

(vi) the entity is controlled or jointly controlled by a person identified in (a);

(vii) a person identified in (a)(i) has significant influence over the entity or is a member of the key

management personnel of the entity (or of a parent of the entity); and

(viii) the entity, or any member of a group of which it is a part, provides key management personnel

services to the Group or to the parent of the Group.



31st December, 2017

2.4 Summary of Significant Accounting Policies (cont’d)Product classification – Insurance contracts

Insurance contracts are those contracts when the Group (the insurer) has accepted significant insurance risk from

another party (the policyholders) by agreeing to compensate the policyholders if a specified uncertain future event

(the insured event) adversely affects the policyholders. As a general guideline, the Group determines whether it has

significant insurance risk, by comparing benefits payable after an insured event with benefits payable if the insured

event did not occur. Insurance contracts can also transfer financial risk.

Once a contract has been classified as an insurance contract, it remains an insurance contract for the remainder

of its lifetime, even if the insurance risk reduces significantly during the period, unless all rights and obligations are

extinguished or expire.

Insurance payables

Insurance payables are recognised when due and measured on initial recognition at fair value of the consideration

received less directly attributable transaction costs. Subsequent to initial recognition, they are measured at amortised

cost using the effective interest rate method.

Derecognition of insurance payables

Insurance payables are derecognised when the obligation under the liability is discharged or cancelled, or expires.

Insurance contracts liabilities

General insurance contracts liabilities

General insurance contracts liabilities include the outstanding claims provision and the provision for unearned

premiums. The outstanding claims provision is based on estimated ultimate cost of all claims incurred but not settled

at the reporting date, whether reported or not, together with handling costs. Delays can be experienced in the

notification and settlement of certain types of general insurance claims. Therefore, the ultimate cost of these cannot

be known with certainty at the reporting date.

Outstanding claims

Full provision has been made for outstanding claims, including those incurred but not reported and incurred but

not enough reported until after the end of the reporting period, and also for the related claims handling expenses

estimated to be necessarily and directly incurred in the claims settlement process. This provision, although not a

precise assessment, has been made in light of available information and after taking into account the direct claims

handling expenses and possible recoveries from other parties. Claims provisions are not discounted for the time

value of money and no estimate of inflationary adjustment is admitted until confirmed as necessary. The provisions

are derecognised when they are discharged or settled.

Incurred but not reported outstanding claims are in respect of losses incurred prior to the end of the reporting period

but reported only subsequent to the end of the reporting period. These outstanding claims have been estimated

by reference to the historical pattern of claims settlement in respect of each major class of insurance portfolio. Any

differences between the original claims provisions made in previous years and the subsequently revised or settled

amount are included in the revenue account for the financial year in which the revision or settlement is made.



31st December, 2017

2.4 Summary of Significant Accounting Policies (cont’d)Insurance contracts liabilities (cont’d)

Unearned premiums

The provision for unearned premiums represents that portion of premium received or receivable that relates to risks

that have not yet expired at the reporting date. The provision is recognised when contracts are entered into and

premiums are charged, and is brought to account as premium income over the term of the contract in accordance

with the pattern of insurance service provided under the contract.

Life insurance contracts liabilities

Life insurance contracts liabilities are recognised when contracts are entered into and premiums are charged. The

provision for life insurance contracts consists of outstanding claims and the life reserve.

Life reserve

Life reserve represents a reserve to cover unexpired risk of life insurance policies and is computed by reference to an

actuarial valuation carried out annually.

Liability adequacy test

At each reporting date, the Group reviews its unexpired risk and a liability adequacy test is performed in accordance

with HKFRS to determine whether there is any overall excess of expected claims over unearned premiums. This

calculation uses current estimates of future contractual cash flows after taking account of the investment return

expected to arise on assets relating to the relevant non-life insurance technical provisions. If these estimates show

that the carrying amount of the unearned premiums is inadequate, the deficiency is recognised in the statement of

profit or loss by setting up a provision for premium deficiency.

Insurance receivables

Insurance receivables are recognised when due and measured on initial recognition at the fair value of the

consideration receivable. Subsequent to initial recognition, insurance receivables are measured at amortised cost,

using the effective interest rate method. The carrying value of insurance receivables is reviewed for impairment

whenever events or circumstances indicate that the carrying amount may not be recoverable, with the impairment

loss recorded in the statement of profit or loss.

Insurance receivables are derecognised when the derecognition criteria for financial assets, as described in the

paragraph “Derecognition of financial assets” above, have been met.



31st December, 2017

2.4 Summary of Significant Accounting Policies (cont’d)Reinsurance

The Group cedes insurance risk in the normal course of business for all of its businesses. Reinsurance assets

represent balances due from reinsurance companies. Amounts recoverable from reinsurers are estimated in a

manner consistent with the outstanding claims provision or settled claims associated with the reinsurer’s policies and

are in accordance with the related reinsurance contract.

Reinsurance assets are reviewed for impairment at each reporting date, or more frequently, when an indication of

impairment arises during the reporting year. Impairment occurs when there is objective evidence that occurred after

initial recognition of the reinsurance asset that the Group may not receive all outstanding amounts due under the

terms of the contract and the event has a reliably measurable impact on the amounts that the Group will receive from

the reinsurer. The impairment loss is recorded in the statement of profit or loss.

Ceded reinsurance arrangements do not relieve the Group from its obligations to policyholders.

The Group also assumes reinsurance risk in the normal course of business for general and life insurance contracts

where applicable. Premiums and claims on assumed reinsurance are recognised as income and expenses in the

same manner as they would be if the reinsurance was considered direct business, taking into account the product

classification of the reinsured business. Reinsurance liabilities represent balances due to reinsurance companies,

which are estimated in accordance with the associated reinsurance contract.

Premiums and claims are presented on a gross basis for both ceded and assumed reinsurance.

Reinsurance assets or liabilities are derecognised when the contractual rights are extinguished or expire or when the

contract is transferred to another party.

Treasury shares

Own equity instruments which are reacquired and held by the Company or the Group (treasury shares) are

recognised directly in equity at cost. No gain or loss is recognised in the statement of profit or loss on the purchase,

sale, issue or cancellation of the Group’s own equity instruments.

Cash and cash equivalents

For the purpose of the consolidated statement of cash flows, cash and cash equivalents comprise cash on hand and

demand deposits, and short term highly liquid investments that are readily convertible into known amounts of cash,

are subject to an insignificant risk of changes in value, and have a short maturity of generally within three months

when acquired.

For the purpose of the consolidated statement of financial position, cash and cash equivalents comprise cash on

hand and at banks, including term deposits, and assets similar in nature to cash, which are not restricted as to use.



31st December, 2017

2.4 Summary of Significant Accounting Policies (cont’d)Provisions

A provision is recognised when a present obligation (legal or constructive) has arisen as a result of a past event and it

is probable that a future outflow of resources will be required to settle the obligation, provided that a reliable estimate

can be made of the amount of the obligation.

When the effect of discounting is material, the amount recognised for a provision is the present value at the end of

the reporting period of the future expenditures expected to be required to settle the obligation. The increase in the

discounted present value amount arising from the passage of time is included in finance costs in the statement of

profit or loss.

Income tax

Income tax comprises current and deferred tax. Income tax relating to items recognised outside profit or loss is

recognised either in other comprehensive income or directly in equity.

Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation

authorities, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the

reporting period, taking into consideration interpretations and practices prevailing in the jurisdictions in which the

Group operates.

Deferred tax is provided, using the liability method, on all material temporary differences at the end of the reporting

period between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax liabilities are recognised for all material taxable temporary differences, except:

• when the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a

transaction that is not a business combination and, at the time of the transaction, affects neither the

accounting profit nor taxable profit or loss; and

• in respect of taxable temporary differences associated with investments in subsidiaries, associates and joint

ventures, when the timing of the reversal of the temporary differences can be controlled and it is probable

that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognised for all material deductible temporary differences, the carryforward of unused tax

credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable

profit will be available against which the deductible temporary differences, the carryforward of unused tax credits and

unused tax losses can be utilised, except:

• when the deferred tax asset relating to the deductible temporary differences arises from the initial recognition

of an asset or liability in a transaction that is not a business combination and, at the time of the transaction,

affects neither the accounting profit nor taxable profit or loss; and

• in respect of deductible temporary differences associated with investments in subsidiaries, associates and

joint ventures, deferred tax assets are only recognised to the extent that it is probable that the temporary

differences will reverse in the foreseeable future and taxable profit will be available against which the

temporary differences can be utilised.



31st December, 2017

2.4 Summary of Significant Accounting Policies (cont’d)Income tax (cont’d)

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at the end of each reporting period and are recognised to the extent that it has become probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax assets and deferred tax liabilities are offset if and only if the Group has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.

Dividends

Final dividends proposed by the directors are classified as a separate allocation of retained profits and/or contributed surplus within the equity section of the statement of financial position, until they have been approved by the shareholders in a general meeting. When these dividends have been approved by the shareholders and declared, they are recognised as a liability.

Interim dividends are simultaneously proposed and declared, because the Company’s memorandum and bye-laws grant the directors the authority to declare interim dividends. Consequently, interim dividends are recognised immediately as a liability when they are proposed and declared.

Foreign currencies

These financial statements are presented in Hong Kong dollars, which is the Company’s functional currency. Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency. Foreign currency transactions recorded by the entities in the Group are initially recorded using their respective functional currency rates prevailing at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency rates of exchange ruling at the end of the reporting period. Differences arising on settlement or translation of monetary items are recognised in the statement of profit or loss.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was measured. The gain or loss arising on translation of a non-monetary item measured at fair value is treated in line with the recognition of the gain or loss on change in fair value of the item (i.e., translation difference on the item whose fair value gain or loss is recognised in other comprehensive income or profit or loss is also recognised in other comprehensive income or profit or loss, respectively).

The functional currencies of certain overseas subsidiaries, joint ventures and associates are currencies other than the Hong Kong dollar. As at the end of the reporting period, the assets and liabilities of these entities are translated into Hong Kong dollars at the exchange rates prevailing at the end of the reporting period and their statements of profit or

loss are translated into Hong Kong dollars at the weighted average exchange rates for the year.



31st December, 2017

2.4 Summary of Significant Accounting Policies (cont’d)Foreign currencies (cont’d)

The resulting exchange differences are recognised in other comprehensive income and accumulated in the exchange

reserve. On disposal of a foreign operation, the component of other comprehensive income relating to that particular

foreign operation is recognised in the statement of profit or loss.

For the purpose of the consolidated statement of cash flows, the cash flows of overseas subsidiaries are translated

into Hong Kong dollars at the exchange rates ruling at the dates of the cash flows. Frequently recurring cash flows of

overseas subsidiaries which arise throughout the year are translated into Hong Kong dollars at the weighted average

exchange rates for the year.

Employee benefits

The Group operates a defined contribution provident fund (the “Fund”) and a Mandatory Provident Fund Scheme (the

“MPF Scheme”) under the Mandatory Provident Fund Schemes Ordinance for its employees. Contributions to the

Fund and the MPF Scheme are charged to the statement of profit or loss as incurred. The amount of contributions

by the Group is based on a specified percentage of the monthly relevant income of the eligible employees.

Forfeited contributions of the Fund in respect of employees who leave before the contributions become fully vested

are available to the Group to reduce its ongoing funding and retirement scheme costs. The Group’s employer

contributions vest fully with the employees when contributed into the MPF Scheme, except for the Group’s employer

voluntary contributions, which are refunded to the Group when the employee leaves employment prior to the

contributions vesting fully. The assets of the Fund and the MPF Scheme are held separately from those of the Group

and placed in independently administered funds.

2.5 Significant Accounting Judgements and EstimatesThe preparation of the Group’s financial statements requires management to make judgements, estimates and

assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and their accompanying

disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could

result in outcomes that could require a material adjustment to the carrying amounts of the assets or liabilities affected

in the future.

Estimates, assumptions and judgements are continuously evaluated and based on historical experience and other

factors, including expectations of future events that are believed to be reasonable under the circumstances.

Estimation uncertainty

The key assumptions concerning the future and other key sources of estimation uncertainty at the end of the

reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and

liabilities within the next financial year, are described below.

Estimation of insurance contracts liabilities

It can take a significant period of time before the ultimate claims cost can be established with certainty. The primary

technique adopted by management in estimating the cost of ultimate claims is using the past claim settlement trends

to predict the future claim settlement trends. At each reporting date, prior year estimates of claims are reassessed for

adequacy and any changes from the previous assessment are made to the provision.

The carrying value at the end of the reporting period for these general insurance contracts liabilities was

HK$2,396,266,000 (2016: HK$1,705,595,000) (note 26(b)).



31st December, 2017

2.5 Significant Accounting Judgements and Estimates (cont’d)Estimation uncertainty (cont’d)

Deferred tax assets

Deferred tax assets are recognised for unused tax losses to the extent that it is probable that taxable profit will be

available against which the losses can be utilised in the foreseeable future. Significant management judgement is

required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and

level of future taxable profits together with future tax planning strategies. No deferred tax asset relating to tax losses

was recognised at 31st December, 2017 (2016: Nil). The amount of unrecognised tax losses at 31st December,

2017 was HK$257,423,000 (2016: HK$286,508,000). Further details are contained in note 31 to the financial

statements.

Fair value measurement of financial instruments

When the fair values of financial assets and financial liabilities recorded in the statement of financial position cannot

be measured based on quoted prices in active markets, their values are measured using valuation techniques or

models. The inputs for these valuation techniques and models are taken from observable markets where possible,

but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements include

considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions relating to these

factors could affect the reported fair value of financial instruments. Further details are contained in notes 18, 20 and

36 to the financial statements.

Impairment of available-for-sale financial assets

The Group follows the guidance of HKAS 39 to determine when available-for-sale securities are impaired. This

determination requires significant judgement. Management makes assumptions about the decline in value to

determine whether there is an impairment that should be recognised in the statement of profit or loss. The net

carrying amount of available-for-sale securities was HK$3,616,130,000 (2016: HK$3,321,596,000) (note 18).

3. Operating Segment InformationFor management purposes, the Group is organised into business units based on their business activities and has

two reportable operating segments as follows:

(a) the insurance segment engages in the provision of underwriting of general and life insurance; and

(b) the corporate segment engages in securities trading and holding and other businesses.

Management monitors the results of its operating segments separately for the purpose of making decisions about

resource allocation and performance assessment. Segment performance is evaluated based on reportable segment

profit/(loss), which is a measure of profit/(loss) before tax from existing operations.

Intersegment transactions are conducted with reference to the terms used for transactions with third parties.



31st December, 2017

3. Operating Segment Information (cont’d)The following tables present revenue, profit and certain asset, liability and expenditure information for the Group’s

operating segments for the years ended 31st December, 2017 and 2016.

Insurance Corporate Eliminations Consolidated

2017 2016 2017 2016 2017 2016 2017 2016HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

Segment revenue:External customers 1,294,323 1,287,457 – – – – 1,294,323 1,287,457Other revenue, income and

gains, net 304,816 93,734 195,492 116,869 – – 500,308 210,603Intersegment 5,449 5,204 – – (5,449) (5,204) – –

Total 1,604,588 1,386,395 195,492 116,869 (5,449) (5,204) 1,794,631 1,498,060

Segment results 318,747 241,870 117,729 45,609 – – 436,476 287,479

Share of profits and losses of:Joint ventures 23,184 18,922 25,062 17,935 – – 48,246 36,857Associates 23,878 6,248 (4,568) 70,310 – – 19,310 76,558

Profit before tax 504,032 400,894Income tax expense (34,171) (33,510) 19 1,654 – – (34,152) (31,856)

Profit for the year 469,880 369,038



31st December, 2017

3. Operating Segment Information (cont’d)Insurance Corporate Consolidated

2017 2016 2017 2016 2017 2016HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

Segment assets 6,738,621 5,564,830 4,493,607 4,056,958 11,232,228 9,621,788Interests in joint ventures 93,124 176,330 115,610 103,774 208,734 280,104Interests in associates 201,792 145,509 234,908 212,308 436,700 357,817Assets of a disposal group classified

as held for sale 105,084 – – – 105,084 –

Total assets 7,138,621 5,886,669 4,844,125 4,373,040 11,982,746 10,259,709

Segment liabilities 3,715,391 2,891,449 245,221 288,656 3,960,612 3,180,105

Other segment information:Depreciation charges 7,397 6,266 7,671 9,297 15,068 15,563Loss/(gain) on disposal/write-off of items

of property, plant and equipment 352 44 7,038 (102) 7,390 (58)Gain on change in fair value of

investment properties (5,000) (5,100) (1,000) – (6,000) (5,100)Capital expenditure 21,774 25,444 3,380 1,536 25,154 26,980

Geographical information

Over 90% of the Group’s revenue and results are derived from operations carried out in Hong Kong, Macau and

Mainland China.

4. RevenueRevenue represents gross premiums net of discounts, from the direct and reinsurance businesses underwritten

during the year.

5. Finance Costs2017 2016

HK$’000 HK$’000

Interest on a bank loan 3,170 2,761



31st December, 2017

6. Profit Before TaxThe Group’s profit before tax is arrived at after crediting/(charging):

Notes 2017 2016HK$’000 HK$’000

Auditor’s remuneration (3,295) (3,751)Depreciation 13 (15,068) (15,563)

Employee benefit expense (including directors’ remuneration, note 7):

Wages and salaries (140,703) (125,060)

Pension scheme contributions (6,041) (5,714)Less: Forfeited contributions 38 7

Net pension scheme contributions (6,003) (5,707)

Total employee benefit expense (146,706) (130,767)

Minimum lease payments under operating leases (1,578) (1,486)

Realised gain/(loss) on:– disposal of securities measured at fair value through

profit or loss (held for trading), net 69,486 9,874– disposal of available-for-sale securities 52,238 115– redemption/call-back of held-to-maturity securities (88) (80)

Total realised gain on investments 121,636 9,909

Unrealised gain on securities measured at fair value through profit or loss (held for trading), net 176,698 2,413

Interest income 65,885 60,576Gain/(loss) on disposal/write-off of items of property,

plant and equipment (7,390) 58Direct operating expenses (including repairs and maintenance)

arising from rental-earning investment properties (170) –Change in fair value of investment properties* 14 6,000 5,100Foreign exchange gain/(loss), net* 13,807 (15,474)

Dividend income from:Listed investments 68,874 67,265Unlisted investments 45,240 68,729

Total dividend income 114,114 135,994

* Such amount was included in “Other income and gains, net” in the consolidated statement of profit or loss.



31st December, 2017

7. Directors’ RemunerationDirectors’ remuneration for the year, disclosed pursuant to the Listing Rules, section 383(1)(a), (b), (c) and (f) of

the Hong Kong Companies Ordinance and Part 2 of the Companies (Disclosure of Information about Benefits of

Directors) Regulation, is as follows:

Salaries,allowances Pension

and benefits Discretionary scheme TotalFees in kind bonuses contributions remuneration

2017 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

Executive directors:CHAN Yau Hing Robin 120 1,836 3,800 72 5,828CHAN Bernard Charnwut1 168 4,736 1,350 218 6,472TAN Stephen 80 3,143 1,100 122 4,445WONG Kok Ho 100 2,674 650 123 3,547

468 12,389 6,900 535 20,292

Non-executive directors:SOPHONPANICH Choedchu2 44 – 200 – 244SOPHONPANICH Chote3 4 – – – 4CHAN Yeow Toh 100 – – – 100YAMAMOTO Takao4 60 – – – 60TANAKA Junichi5 60 – – – 60

268 – 200 – 468

Independent non-executive directors:MA Andrew Chiu Cheung 198 – – – 198CHOW Suk Han Anna 208 – – – 208SIAO Chi Lam Kenneth2 61 – – – 61WONG Yu Hong Philip2 44 – – – 44LAI KO Wing Yee Rebecca 201 – – – 201SHUEN LEUNG Lai Sheung

Loretta3 60 – – – 60

772 – – – 772

1,508 12,389 7,100 535 21,532

1 Mr. CHAN Bernard Charnwut is also the President of the Group.

2 Resigned during the year ended 31st December, 2017.

3 Appointed during the year ended 31st December, 2017.

4 The directorship of Mr. YAMAMOTO Takao was nominated by Aioi Nissay Dowa Insurance Company, Limited (“Aioi

Insurance”). As per Aioi Insurance’s instruction, the director’s fee in total of HK$60,000 for the year ended 31st December,

2017 was paid directly to Aioi Insurance.

5 The directorship of Mr. TANAKA Junichi was nominated by Sompo Japan Nipponkoa Insurance Inc. As per Mr. TANAKA

Junichi’s instruction, his director’s fee of HK$60,000 for the year ended 31st December, 2017 was paid to “Sompo Japan

Nipponkoa Insurance Inc – HK Rep Office” directly.



31st December, 2017

7. Directors’ Remuneration (cont’d)Salaries,

allowances Pensionand benefits Discretionary scheme Total

Fees in kind bonuses contributions remuneration2016 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

Executive directors:CHAN Yau Hing Robin 120 1,836 3,450 72 5,478CHAN Bernard Charnwut1 160 4,546 1,000 209 5,915TAN Stephen 80 2,941 800 117 3,938WONG Kok Ho 100 3,144 650 145 4,039

460 12,467 5,900 543 19,370

Non-executive directors:SOPHONPANICH Choedchu 100 12 150 – 262NG Song Hin2 28 – – – 28CHAN Yeow Toh 100 – – – 100YAMAGUCHI Yoshihiro2, 4 23 – – – 23YAMAMOTO Takao3, 4 37 – – – 37TANAKA Junichi5 60 – – – 60

348 12 150 – 510

Independent non-executive directors:MA Andrew Chiu Cheung 190 – – – 190CHOW Suk Han Anna 200 – – – 200SIAO Chi Lam Kenneth 100 – – – 100WONG Yu Hong Philip 100 – – – 100LAI KO Wing Yee Rebecca 190 – – – 190

780 – – – 780

1,588 12,479 6,050 543 20,660

1 Mr. CHAN Bernard Charnwut is also the President of the Group.

2 Resigned/retired during the year ended 31st December, 2016.

3 Appointed during the year ended 31st December, 2016.

4 The directorship of Mr. YAMAGUCHI Yoshihiro and Mr. YAMAMOTO Takao was nominated by Aioi Nissay Dowa Insurance

Company, Limited (“Aioi Insurance”). As per Aioi Insurance’s instruction, the director’s fee in total of HK$60,000 for the year

ended 31st December, 2016 was paid directly to Aioi Insurance.

5 The directorship of Mr. TANAKA Junichi was nominated by Sompo Japan Nipponkoa Insurance Inc. As per Mr. TANAKA

Junichi’s instruction, his director’s fee of HK$60,000 for the year ended 31st December, 2016 was paid to “Sompo Japan

Nipponkoa Insurance Inc – HK Rep Office” directly.



31st December, 2017

8. Five Highest Paid EmployeesThe five highest paid employees during the year included four (2016: four) directors, details of whose remuneration

are set out in note 7 above. Details of the remuneration for the year of the remaining one (2016: one) highest paid

employee who is neither a director nor chief executive of the Company are as follows:

2017 2016

HK$’000 HK$’000

Salaries, commission, allowances and benefits in kind 3,749 3,610

Discretionary bonuses 400 –

Pension scheme contributions 164 12

4,313 3,622

The remuneration of the remaining one (2016: one) non-director, highest paid employee fell within the band of

HK$4,000,001 to HK$4,500,000 (2016: HK$3,500,001 to HK$4,000,000).

9. Income TaxHong Kong profits tax has been provided at the rate of 16.5% (2016: 16.5%) on the estimated assessable profits

arising in Hong Kong during the year. Taxes on profits assessable elsewhere have been calculated at the rates of tax

prevailing in the locations in which the Group operates.

2017 2016

HK$’000 HK$’000

Current – Hong Kong

Charge for the year 31,045 28,044

Overprovision in prior years (78) (4,551)

Current – Elsewhere

Charge for the year 2,367 5,733

Under/(over) provision in prior years (569) 287

Deferred (note 31) 1,387 2,343

Total tax charge for the year 34,152 31,856



31st December, 2017

9. Income Tax (cont’d)A reconciliation of the tax expense applicable to profit before tax at the statutory rates for the locations in which the

Company and the majority of its subsidiaries are domiciled to the tax expense at the effective tax rates is as follows:

2017

Hong Kong Macau Total

HK$’000 HK$’000 HK$’000

Profit before tax 481,231 22,801 504,032

Tax at the statutory tax rates 79,403 2,736 82,139

Share of profits and losses attributable to

joint ventures and associates (11,147) – (11,147)

Adjustments in respect of current

tax of previous periods (78) (569) (647)

Income not subject to tax (44,031) (86) (44,117)

Expenses not deductible for tax 11,191 1,532 12,723

Tax losses from previous periods utilised (7,676) – (7,676)

Tax losses not recognised 2,877 – 2,877

Tax charge at the Group’s effective rate 30,539 3,613 34,152

2016


HK$’000 HK$’000 HK$’000

Profit before tax 349,658 51,236 400,894

Tax at the statutory tax rates 57,694 6,148 63,842

Share of profits and losses attributable to

joint ventures and associates (18,713) – (18,713)

Adjustments in respect of current

tax of previous periods (4,551) 287 (4,264)

Income not subject to tax (25,539) – (25,539)

Expenses not deductible for tax 12,665 454 13,119

Tax losses from previous periods utilised (3,499) – (3,499)

Tax losses not recognised 6,910 – 6,910

Tax charge at the Group’s effective rate 24,967 6,889 31,856



31st December, 2017

9. Income Tax (cont’d)The share of tax attributable to joint ventures amounting to HK$7,161,000 (2016: HK$5,481,000) is included in

“Share of profits and losses of joint ventures” in the consolidated statement of profit or loss. The share of tax

attributable to associates and the effect of withholding tax on the distributable profits of the Group’s associate

in the People’s Republic of China amounting to HK$5,678,000 (2016: HK$15,936,000) and HK$41,000 (2016:

HK$2,953,000), respectively, are included in “Share of profits and losses of associates” in the consolidated

statement of profit or loss.

10. Dividends2017 2016

HK$’000 HK$’000

Interim – HK4.0 cents (2016: HK2.5 cents) per ordinary share 39,139 24,576

Proposed final – HK7.5 cents (2016: HK5.5 cents) per ordinary share 73,386 53,816

112,525 78,392

The proposed final dividend for the year is subject to the approval of the Company’s shareholders at the forthcoming

annual general meeting. Accordingly, the proposed final dividend has been included in the proposed final dividend

reserve account within the equity attributable to the equity holders of the Company of the statement of financial

position.

11. Earnings per share Attributable to Ordinary Equity Holders of the CompanyThe calculation of the basic earnings per share amount is based on the profit for the year attributable to ordinary

equity holders of the Company of HK$468,187,000 (2016: HK$367,271,000) and the weighted average number of

ordinary shares of 978,478,000 (2016: 997,454,000) in issue during the year.

No adjustment has been made to the basic earnings per share amounts presented for the years ended 31st

December, 2017 and 2016 in respect of a dilution as the Group had no potentially dilutive ordinary shares in issue

during the years ended 31st December, 2017 and 2016.

12. Assets of a Disposal Group Classified as held for SaleOn 20th March, 2017, Asia Insurance Company, Limited (“Asia Insurance”), a wholly-owned subsidiary of the

Company, entered into a share sale agreement with an independent third party to dispose of 16.67% of the issued

share capital of Hong Kong Life Insurance Limited for a cash consideration of approximately HK$1,183 million before

transaction related expenses. The Group has received a non-refundable deposit of HK$118,333,000, being 10% of

the consideration. Completion of the transaction is subject to certain conditions including obtaining the necessary

approvals from the relevant authorities. As at 31st December, 2017, the approval process for the disposal of the

relevant authorities was in progress and the Group’s interests in Hong Kong Life Insurance Limited was classified as

a disposal group held for sale. Deposit of HK$118,333,000 (2016: Nil) was included in other liabilities. Further details

of the transaction were disclosed in the Company’s announcements dated 20th March, 2017 and 15th March, 2018

and circular dated 31st May, 2017.



31st December, 2017

12. Assets of a Disposal Group Classified as held for Sale (cont’d)Particulars of the disposal group held for sale of the Group as at 31st December, 2017 are as follows:

Name

Business

structure

Place of

incorporation

Issued

ordinary

share capital

Percentage of

equity directly

held by

the Company

Principal

activity

Hong Kong Life Insurance

Limited

Corporate Hong Kong HK$420,000,000 16.67 Life insurance

The major classes of assets and reserve classified as held for sale as at 31st December, 2017 are as follows:

2017 2016

HK$’000 HK$’000

Assets

Interests in a joint venture 105,084 –

Assets of a disposal group classified as held for sale and net assets

directly associated with the disposal group 105,084 –

Reserve

Investment revaluation reserve 3,595 –

Reserve of a disposal group classified as held for sale 3,595 –



31st December, 2017

13. Property, Plant and Equipment31st December, 2017

Land and

buildings

Furniture,

fixtures,

equipment,

yacht and

motor vehicles Total

HK$’000 HK$’000 HK$’000

Cost or valuation:

At beginning of year 397,707 89,584 487,291

Additions 12,552 12,602 25,154

Disposals/write-off – (23,390) (23,390)

Transfer to investment properties (note 14) (173,600) – (173,600)

At 31st December, 2017 236,659 78,796 315,455

Accumulated depreciation and impairment:


Charge for the year 7,871 7,197 15,068


Transfer to investment properties (note 14) (13,050) – (13,050)

At 31st December, 2017 76,021 62,984 139,005

Net book value:

At 31st December, 2017 160,638 15,812 176,450

At 31st December, 2016 316,507 18,980 335,487



31st December, 2017

13. Property, Plant and Equipment (cont’d)31st December, 2016

Land and

buildings

Furniture,

fixtures,

equipment,

yacht and

motor vehicles Total

HK$’000 HK$’000 HK$’000

Cost or valuation:


Additions 22,081 4,899 26,980


At 31st December, 2016 397,707 89,584 487,291

Accumulated depreciation and impairment:


Charge for the year 7,909 7,654 15,563


At 31st December, 2016 81,200 70,604 151,804

Net book value:

At 31st December, 2016 316,507 18,980 335,487

At 31st December, 2015 302,335 21,927 324,262

During the year ended 31st December, 2017, certain land and buildings were transferred to investment properties at

fair value of HK$246,000,000 (2016: Nil) based on valuation by Memfus Wong Surveyors Limited, an independent

firm of professionally qualified valuers (note 14). Accordingly, an asset revaluation reserve of HK$85,450,000 (2016:

Nil) was credited to other comprehensive income.



31st December, 2017

14. Investment Properties

2017 2016

HK$’000 HK$’000

Carrying amount at 1st January 28,200 23,100

Change in fair value (note 6) 6,000 5,100

Transfer from property, plant and equipment (note 13) 246,000 –

Carrying amount at 31st December 280,200 28,200

The Group’s investment properties were revalued at 31st December, 2017 based on valuations performed by

Memfus Wong Surveyors Limited and AA Property Services Limited, independent firms of professionally qualified

valuers, at HK$247,000,000 (2016: HK$14,200,000) and HK$33,200,000 (2016: HK$14,000,000), respectively. The

Group decides to appoint which external valuer to be responsible for the external valuation of the Group’s properties

based on selection criteria including market knowledge, reputation, independence and whether professional

standards are maintained. The management of the Group has discussions with the valuers on the valuation

assumptions and valuation results annually when the valuation is performed for financial reporting. The investment

properties are leased to third parties under operating leases.

As at 31st December, 2017 and 2016, the fair value measurement of the Group’s investment properties is

categorised in Level 3 of the fair value hierarchy (i.e., fair value measurement using significant unobservable inputs).

During the years ended 31st December, 2017 and 2016, there were no transfers into or out of Level 3.



31st December, 2017

14. Investment Properties (cont’d)Reconciliation of fair value measurements categorised within Level 3 of the fair value hierarchy:

Commercial Commercial

properties in properties in


HK$’000 HK$’000 HK$’000

Carrying amount at 1st January, 2016 13,500 9,600 23,100

Change in fair value of investment properties 700 4,400 5,100

Carrying amount at 31st December, 2016 and

1st January, 2017 14,200 14,000 28,200

Transfer from property, plant and equipment (note 13) 246,000 – 246,000

Change in fair value of investment properties 3,300 2,700 6,000

Carrying amount at 31st December, 2017 263,500 16,700 280,200

Below is a summary of the valuation techniques used and the key inputs to the valuation inputs of the investment

properties:

Valuation techniques

Significant

unobservable inputs Range or weighted average

2017 2016

Commercial properties

in Macau

Income capitalisation

approach

Monthly rent per square feet

Capitalisation rate

HK$19 to HK$26

2.15% to 3%

HK$18 to HK$26

2.5% to 3.5%

Commercial properties

in Hong Kong

Direct comparison plus term

and reversion approach

Unit rate per square feet HK$16,000 to

HK$26,000

HK$22,000

A significant increase/(decrease) in the monthly rent and unit rate per square feet in isolation would result in a

significant increase/(decrease) in the fair value of the investment properties. A significant increase/(decrease) in

the capitalisation rate in isolation would result in a significant decrease/(increase) in the fair value of the investment

properties.



31st December, 2017

15. Interests In Joint Ventures2017 2016

Notes HK$’000 HK$’000

Share of net assets 208,734 280,104

Goodwill on acquisition 16,655 16,655

225,389 296,759

Less: Impairment (i) (16,655) (16,655)

208,734 280,104

Loans to a joint venture (ii) 54,000 56,500

Due to a joint venture (iii) (28,099) (25,055)

Notes:

(i) At 31st December, 2017, an impairment of HK$16,655,000 (2016: HK$16,655,000) was recognised for an interest in a joint

venture with a carrying amount of HK$52,257,000 (2016: HK$48,319,000) (before deducting the impairment loss) because

this joint venture had become inactive.

(ii) At 31st December, 2017, the loans to a joint venture amounting to HK$54,000,000 (2016: HK$56,500,000) are unsecured,

bear interest at 2% (2016: 2%) per annum and have no fixed terms of repayment.

(iii) Except for an amount due to a joint venture of HK$26,183,000 (2016: HK$23,640,000) which bears interest at 1.25%

(2016: 1.375%) per annum, the amounts due to a joint venture are unsecured, interest-free and repayable on demand.



31st December, 2017

15. Interests in Joint Ventures (cont’d)Particulars of the joint ventures of the Group as at 31st December, 2017 are as follows:

Percentage of

Place of ownership

Business incorporation interest and Voting Principal

Name structure and operation profit sharing power activities

Bank Consortium Holding Limited* Corporate Hong Kong 13.3 1 out of 7# Provision of mandatory

provident fund scheme

services

BC Reinsurance Limited Corporate Hong Kong 21 2 out of 10# Reinsurance underwriting

Bumrungrad International Limited Corporate Thailand 19.5 1 out of 5# Provision of health care

services

Super Win Limited* Corporate Hong Kong 50 2 out of 4# Property investment

Notes:

* Not audited by Ernst & Young, Hong Kong or another member firm of the Ernst & Young global network

# Representing the number of votes on the board of directors attributable to the Group

During the year ended 31st December, 2017, interest in a joint venture, Hong Kong Life Insurance Limited, was

reclassified as a disposal group held for sale (note 12).

During the year, the Group received dividend income amounting to HK$19,891,000 (2016: HK$17,450,000) from the

joint ventures.

The following table illustrates the aggregate financial information of the Group’s joint ventures that are not individually

material:

2017 2016

HK$’000 HK$’000

Share of the joint ventures’ profit for the year 48,246 36,857

Share of the joint ventures’ other comprehensive income 5,359 2,978

Share of the joint ventures’ total comprehensive income 53,605 39,835

Aggregate carrying amount of the Group’s interests in the joint ventures 208,734 280,104



31st December, 2017


31st December, 2017

16. Interests in Associates2017 2016

HK$’000 HK$’000

Share of net assets 430,971 352,088

Goodwill on acquisition 5,729 5,729

436,700 357,817

Particulars of the associates of the Group as at 31st December, 2017, which are all corporate entities, are as follows:

PercentagePlace of of equity

incorporation/ indirectly Issuedestablishment held by the ordinary/registered Principal

Name and operation Company share capital activities

APIC Holdings, Inc.* Philippines 50 Peso23,241,700 Investment holding

Asian Insurance International (Holding) Limited

Bermuda 25 US$5,740,000 Investment holding

Professional Liability Underwriting Services Limited

Hong Kong 27 HK$3,000,000 Insurance agent

The People’s Insurance Company of China (Hong Kong), Limited* (“PICC (HK)”)

Hong Kong 17.375# HK$500,000,000 (2016: HK$360,000,000)

Insurance underwriting

Key Apex Limited* British Virgin Islands 27.5 US$1,000 Investment holding

Excellent Star Development Limited Hong Kong 27.5 HK$1 Investment holding

上海盤谷房地產有限公司* The People’s Republic of China

27.5 RMB570,870,560 Property development

Health Horizons Enterprises Pte. Limited* (“HHE”)

Singapore 20 US$16,849,422 Investment holding

Bangkok Insurance (Lao) Company Limited*

Lao 27.5 LAK16,000,000,000 Insurance

Glory Standard Limited* (Note (a)) Hong Kong 45 HK$10,000 Property investment

Notes:

* Not audited by Ernst & Young, Hong Kong or another member firm of the Ernst & Young global network

# The Group holds 25% equity interest in this associate through a non-wholly-owned subsidiary.



31st December, 2017

16. Interests in Associates (cont’d)Notes: (cont’d)

(a) During the year ended 31st December 2016, the Group subscribed 45% equity interest in Glory Standard Limited at a cash

consideration of approximately HK$5,000.

The Group received dividend income amounting to HK$5,714,000 (2016: HK$5,878,000) from the associates during

the year.

The amounts due from associates are unsecured, interest-free and have no fixed terms of repayment. In the opinion

of the directors, an amount due from an associate of HK$168,390,000 (2016: HK$168,390,000) is considered as

part of the Group’s investment in the associate.

The amounts due to associates are classified as financial liabilities at amortised cost, and are unsecured, interest-free

and have no fixed terms of repayment.

The following table illustrates the aggregate financial information of the Group’s associates that are not individually

material:

2017 2016

HK$’000 HK$’000

Share of the associates’ profit for the year 19,310 76,558

Share of the associates’ other comprehensive income/(expenses) 30,283 (27,313)

Share of the associates’ total comprehensive income 49,593 49,245

Aggregate carrying amount of the Group’s interests in the associates 436,700 357,817

17. Held-to-Maturity Securities2017 2016

HK$’000 HK$’000

Listed debt securities in Hong Kong, at amortised cost 376,960 298,467

Listed debt securities outside Hong Kong, at amortised cost 184,210 183,723

Unlisted debt securities, at amortised cost 164,388 169,779

Total held-to-maturity securities 725,558 651,969

The fair values of the listed and unlisted held-to-maturity securities are based on quoted market prices and quoted

prices from brokers and fund managers, respectively.



31st December, 2017

17. Held-to-maturity Securities (cont’d)None of the held-to-maturity securities are either past due or impaired. The financial assets included in held-to-

maturity securities relate to receivables for which there was no recent history of default.

The held-to-maturity securities analysed by issuer as at the end of the reporting period are as follows:

2017 2016

HK$’000 HK$’000

Banks and other financial institutions 573,680 439,343

Corporate entities 151,878 212,626

725,558 651,969

The maturity profile of the held-to-maturity securities as at the end of the reporting period is as follows:

2017 2016

HK$’000 HK$’000

With a residual maturity of:

Three months or less 75,153 11,699

One year or less but over three months 66,105 79,789

Five years or less but over one year 258,076 313,351

Over five years 326,224 247,130

725,558 651,969

At the end of the reporting period, the Group invested in the held-to-maturity securities with investment grade

and non-investment grade amounting to HK$644,407,000 (2016: HK$523,872,000) and HK$81,151,000 (2016:

HK$128,097,000), respectively.

During the year, a cedant of certain pecuniary loss reinsurance contracts requested the Group to provide security

in favour of the cedant to secure the performance of the Group’s obligations to the cedant under those pecuniary

loss reinsurance contracts. Accordingly, at 31st December, 2017, listed debt securities of the Group amounting to

HK$119,409,000 (2016: HK$119,956,000) were pledged.



31st December, 2017

18. Available-for-sale Securities2017 2016

HK$’000 HK$’000

Listed equities in Hong Kong, at fair value – 176,787

Listed equities outside Hong Kong, at fair value 2,021,466 1,550,145

Total listed available-for-sale securities 2,021,466 1,726,932

Unlisted equities, at cost 1,624,863 1,624,863

Less: Impairment (32,056) (32,056)

1,592,807 1,592,807

Unlisted debt, at cost 8,070 8,070

Less: Impairment (6,213) (6,213)

1,857 1,857

Total unlisted available-for-sale securities 1,594,664 1,594,664

Total available-for-sale securities 3,616,130 3,321,596

The available-for-sale securities as at the end of the reporting period, analysed by the sector of the issuers, are as

follows:

2017 2016

HK$’000 HK$’000

Banks and other financial institutions 2,516,365 2,230,363

Corporate entities 1,099,765 1,091,233

3,616,130 3,321,596

During the year, the gross gain in respect of the Group’s available-for-sale listed investments recognised in other

comprehensive income amounted to HK$496,362,000 (2016: loss of HK$107,849,000).

The fair values of listed equity investments are based on quoted market prices. Certain unlisted available-for-sale

equity investments of the Group with a carrying amount of HK$1,592,807,000 (2016: HK$1,592,807,000) are

measured at cost less impairment because the range of reasonable fair value estimates is so significant that the

directors are of the opinion that their fair values cannot be measured reliably. The Group does not intend to dispose

of them in the near future.



31st December, 2017

18. Available-for-sale Securities (cont’d)As at 31st December, 2017, the Group’s bank loan is secured by the pledge of certain equity securities listed in

Hong Kong classified as available-for-sale securities and securities measured at fair value through profit or loss with

fair value of not less than HK$150,000,000 (2016: HK$150,000,000) (note 30).

19. Loans and Advances and Other Assets2017 2016

HK$’000 HK$’000

Loans and advances 12,796 14,517

Accrued interest and other assets 104,539 114,835

Gross loans and advances and other assets 117,335 129,352

The Group’s accrued interest and other assets were current in nature as at 31st December, 2017 and 2016. None

of the loans and advances and other assets is either past due or impaired. The financial assets included in the loans

and advances and other assets relate to receivables for which there was no recent history of default.

The maturity profile of the loans and advances as at the end of the reporting period is as follows:

2017 2016

HK$’000 HK$’000

Repayable on demand – –


Three months or less 392 442

One year or less but over three months 1,129 1,279

Five years or less but over one year 8,396 5,486

Over five years 2,879 7,310

12,796 14,517



31st December, 2017

20. Securities Measured at Fair Value Through Profit or Loss2017 2016

HK$’000 HK$’000

Debt securities:

– listed in Hong Kong, at fair value 59,471 79,552

– listed outside Hong Kong, at fair value 62,380 110,244

– unlisted, at quoted price 15,731 15,792

137,582 205,588

Equity securities at fair value:

– listed in Hong Kong 435,505 321,166

– listed outside Hong Kong 465,185 467,569

900,690 788,735

Investment funds:

– listed outside Hong Kong, at fair value 16,207 –

– unlisted, at quoted price 681,707 530,447

697,914 530,447

Total 1,736,186 1,524,770

The fair values of the listed and unlisted securities measured at fair value through profit or loss are based on quoted

market prices and quoted prices from brokers and fund managers, respectively.

The securities measured at fair value through profit or loss as at the end of the reporting period, analysed by the

sector of the issuers, are as follows:

2017 2016

HK$’000 HK$’000

Public sector entities 45,427 22,028

Banks and other financial institutions 209,258 268,601

Corporate entities 1,481,501 1,234,141

1,736,186 1,524,770

Securities measured at fair value through profit or loss at 31st December, 2017 and 2016 were classified as held for

trading.

As at 31st December, 2017, the Group’s bank loan is secured by the pledge of certain equity securities listed in

Hong Kong classified as available-for-sale securities and securities measured at fair value through profit or loss with

fair value of not less than HK$150,000,000 (2016: HK$150,000,000) (note 30).



31st December, 2017

21. Insurance Receivables2017 2016

HK$’000 HK$’000

Amounts due in respect of:

Direct underwriting 104,436 102,296

Reinsurance accepted 120,726 95,169

225,162 197,465

The Group grants credit terms of three months to six months on billed policies. The past settlement history of these

receivables indicates that certain debtors settle in arrears subsequent to the credit period, which may also involve

settlement subsequent to the 12 months from the end of the reporting period.

The Group’s insurance receivables relate to a large number of diversified customers and therefore there is no

significant concentration of credit risk. Insurance receivables are non-interest-bearing.

An aging analysis of the insurance receivables based on the issuance date of policies, as at the end of the reporting

period, is as follows:

2017 2016

HK$’000 HK$’000

Three months or less 196,550 183,907

Six months or less but over three months 28,890 15,922

One year or less but over six months 2,120 –

Over one year 367 401

227,927 200,230

Less: Impairment allowances (2,765) (2,765)

225,162 197,465

Included in the provision for impairment of insurance receivables at 31st December, 2017 was a provision for an

individually impaired insurance receivable of HK$488,000 (2016: HK$488,000) with a gross carrying amount of

HK$488,000 (2016: HK$488,000). The individually impaired insurance receivable related to a customer that was in

financial difficulties. The Group does not hold any collateral or other credit enhancements over the balance.



31st December, 2017

21. Insurance Receivables (cont’d)The aging analysis of the insurance receivables that are not impaired is as follows:

2017 2016

HK$’000 HK$’000

Not past due 171,042 183,907

Less than one month past due 25,508 13,558

Over one month past due 28,612 –

225,162 197,465

Receivables that were neither past due nor impaired relate to a large number of diversified customers for whom there

was no recent history of default.

Receivables that were past due but not impaired relate to a number of independent customers that have a good

track record with the Group. Based on past experience, the directors of the Company are of the opinion that no

material provision for impairment is necessary in respect of these balances as there has not been any significant

change in credit quality and the balances are still considered fully recoverable. The Group does not hold any

collateral or other credit enhancements over these balances.

22. Reinsurance Assets2017 2016

HK$’000 HK$’000

Reinsurers’ share of insurance contracts liabilities (note 26) 1,211,355 583,379

23. Cash and Cash Equivalents and Pledged Deposits2017 2016

HK$’000 HK$’000

Cash and bank balances 182,880 168,772

Time deposits with original maturity of over three months 210,797 215,363

Time deposits with original maturity of less than three months 2,233,547 2,049,255

2,627,224 2,433,390

Pledged deposits 206,488 158,915

2,833,712 2,592,305



31st December, 2017

23. Cash and Cash Equivalents and Pledged Deposits (cont’d)The pledged deposits are pledged in favour of Autoridade Monetaria e Cambial de Macau as security for the

outstanding claims provision and unearned premiums reserve of a subsidiary operating in Macau as required under

the applicable laws of Macau.

Cash and cash equivalents included cash at banks and short term time deposits. Cash at banks earns interest at

floating rates based on daily bank deposit rates. Short term time deposits are made for varying periods of between

one day and three months depending on the immediate cash requirements of the Group, and earn interest at the

respective short term time deposit rates. Time deposits with original maturity of more than three months when

acquired earn interest at the respective time deposit rates with terms between three months and twelve months. The

bank balances and pledged deposits are deposited with creditworthy banks with no recent history of default.

The maturity profile of the cash and bank balances, time deposits and pledged deposits as at the end of the

reporting period was as follows:

2017 2016

HK$’000 HK$’000


Three months or less 2,518,173 2,478,503

Over three months but less than one year 315,539 113,802

2,833,712 2,592,305

24. Share Capital2017 2016

HK$’000 HK$’000

Authorised:

1,500,000,000 ordinary shares of HK$1 each 1,500,000 1,500,000

Issued and fully paid:

978,478,000 ordinary shares of HK$1 each 978,478 978,478

A summary of movements in the Company’s share capital is as follows:

Number of Share

shares in issue capital

HK$’000

At 1st January, 2016 1,019,200,000 1,019,200

Shares repurchased (Note) (40,722,000) (40,722)

At 31st December, 2016, 1st January, 2017 and 31st December, 2017 978,478,000 978,478



31st December, 2017

24. Share Capital (cont’d)Note:

During the year ended 31st December, 2016, a subsidiary of the Company repurchased and cancelled 40,722,000 ordinary shares

of the Company of HK$1 each on the Stock Exchange at prices ranging from HK$3.00 to HK$4.82 per share at a total consideration

of HK$182,579,000 (including expenses of HK$497,000).

The premium of HK$141,857,000 paid on the repurchase of such shares was debited to the retained profits account and an

amount of HK$40,722,000 was transferred from retained profits of the Company to the capital redemption reserve, as set out in the

consolidated statement of changes in equity.

25. ReservesThe amounts of the Group’s reserves and the movements therein for the current and prior years are presented in the

consolidated statement of changes in equity of the financial statements.

In accordance with the Macau Commercial Codes, a branch (the “Branch”) of Asia Insurance Company, Limited,

a wholly-owned subsidiary of the Company, whose principal operation is conducted in Macau, is required to

appropriate annually not less than 25% of its profit after tax to a statutory reserve, until the balance of the reserve

reaches 50% of the entity’s capital fund, which was achieved in prior years. The statutory reserve may be utilised by

the Branch for certain restricted purposes including offsetting against the accumulated losses, if any, arising under

certain specified circumstances.

Contingency reserve (“CR”) represents a reserve established in accordance with Guideline on Reserving for Mortgage

Guarantee Business (“GL6”) issued by the Insurance Authority. In respect of mortgage guarantee business entered

into before 1st January, 2011, an amount equals to 50% of the net earned premium income derived from mortgage

guarantee business shall be assigned to the CR in each year and maintained for a period of seven years. In respect

of mortgage guarantee business entered into on or after 1st January, 2011, an amount equals to 50% of the net

earned premium income derived from mortgage guarantee business, except for direct non-standard mortgage

guarantee business of which the amount is equal to 75% of the net earned premium, shall be assigned to the CR in

each year and maintained for a period of ten years. In accordance with GL6, withdrawals may be made where the

claims incurred in any year exceed 35% of the net earned premium income in that year, and any such withdrawals

shall only be made on a first-in-first-out basis and recognised directly in equity.

At the end of the seventh year for mortgage guarantee business entered into before 1st January, 2011, or the tenth

year for mortgage guarantee business entered into on or after 1st January, 2011, the amount assigned to the CR in

respect of a year may, to the extent that it has not already been depleted by prior withdrawals, be released. Changes

in CR are recognised directly in equity.

No withdrawal was made to the CR during the year ended 31st December, 2017 (2016: Nil).



31st December, 2017

26. Insurance Contracts Liabilities2017 2016

Insurance Reinsurers’ Insurance Reinsurers’

contracts share of contracts share of

Notes liabilities liabilities Net liabilities liabilities Net

HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

Life insurance contracts (a) 66,581 – 66,581 55,775 – 55,775

General insurance contracts (b) 3,121,200 (1,211,355) 1,909,845 2,440,821 (583,379) 1,857,442

Total insurance contracts liabilities 3,187,781 (1,211,355) 1,976,426 2,496,596 (583,379) 1,913,217

(note 22) (note 22)

(a) Life insurance contracts liabilities are analysed as follows:

2017 2016

Insurance Reinsurers’ Insurance Reinsurers’

contracts share of contracts share of

Notes liabilities liabilities Net liabilities liabilities Net

HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

Life reserve (1) 59,821 – 59,821 48,886 – 48,886

Provision for claims (2) 6,760 – 6,760 6,889 – 6,889

66,581 – 66,581 55,775 – 55,775

(1) Life reserve is analysed as follows:

2017 2016

HK$’000 HK$’000

At 1st January 48,886 45,823

Increase in the year 10,935 3,063

At 31st December 59,821 48,886

(2) The provision for claims of life insurance contracts is analysed as follows:

2017 2016

Insurance

contracts

liabilities

Reinsurers’

share of

liabilities Net

Insurance

contracts

liabilities

Reinsurers’

share of

liabilities Net

HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

At 1st January 6,889 – 6,889 4,985 – 4,985

Claims incurred during the year 20,437 (8,402) 12,035 17,666 (5,774) 11,892

Claims paid during the year (20,566) 8,402 (12,164) (15,762) 5,774 (9,988)

At 31st December 6,760 – 6,760 6,889 – 6,889



31st December, 2017

26. Insurance Contracts Liabilities (cont’d)(b) General insurance contracts liabilities are analysed as follows:

2017 2016

Notes

Insurancecontractsliabilities

Reinsurers’share of

liabilities Net

Insurancecontractsliabilities

Reinsurers’

share ofliabilities Net

HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

Provision for claims reported by policyholders 1,472,962 (846,483) 626,479 790,093 (208,443) 581,650

Provision for claims incurred but not reported (“IBNR”) 923,304 (102,400) 820,904 915,502 (113,300) 802,202

Total claims reported and IBNR (1) 2,396,266 (948,883) 1,447,383 1,705,595 (321,743) 1,383,852Provision for unearned

premiums (2) 724,934 (262,472) 462,462 735,226 (261,636) 473,590

Total general insurance contract liabilities 3,121,200 (1,211,355) 1,909,845 2,440,821 (583,379) 1,857,442

(1) The provision for claims reported by policyholders and IBNR is analysed as follows:

2017 2016

Insurance

contracts

liabilities

Reinsurers’

share of

liabilities Net

Insurance

contracts

liabilities

Reinsurers’

share of

liabilities Net

HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

At 1st January 1,705,595 (321,743) 1,383,852 1,677,152 (339,642) 1,337,510

Claims incurred during the year 1,273,376 (810,576) 462,800 490,174 (133,300) 356,874

Claims paid during the year (582,705) 183,436 (399,269) (461,731) 151,199 (310,532)

At 31st December 2,396,266 (948,883) 1,447,383 1,705,595 (321,743) 1,383,852

(2) The provision for unearned premiums is analysed as follows:

2017 2016

Insurance

contracts

liabilities

Reinsurers’

share of

liabilities Net

Insurance

contracts

liabilities

Reinsurers’

share of

liabilities Net

HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

At 1st January 735,226 (261,636) 473,590 727,788 (227,556) 500,232

Premiums written during the year 1,242,456 (427,142) 815,314 1,248,117 (443,778) 804,339

Premiums earned during the year (1,252,748) 426,306 (826,442) (1,240,679) 409,698 (830,981)

At 31st December 724,934 (262,472) 462,462 735,226 (261,636) 473,590



31st December, 2017

27. Net Premiums2017 2016


(a) Gross premiums on insurance contracts

Gross general insurance premiums:

Direct underwriting 832,146 840,825

Reinsurance accepted 410,310 407,292

Total gross general insurance premiums 26(b)(2) 1,242,456 1,248,117

Gross life insurance premiums 51,867 39,340

Change in gross unearned premiums 10,292 (7,438)

Change in life reserve 26(a)(1) (10,935) (3,063)

Total gross premiums 1,293,680 1,276,956

(b) Reinsurers’ share of gross premiums on insurance

contracts

Gross general insurance premiums:

Direct underwriting (250,129) (283,154)

Reinsurance accepted (177,013) (160,624)

Total gross general insurance premiums 26(b)(2) (427,142) (443,778)

Gross life insurance premiums (21,785) (17,542)

Change in unearned premiums 836 34,080

Total reinsurers’ share of gross premiums (448,091) (427,240)



31st December, 2017

28. Net Claims Incurred2017 2016


(a) Gross claims paid

Life insurance contracts claims paid 26(a)(2) (20,566) (15,762)

General insurance contracts claims paid 26(b)(1) (582,705) (461,731)

Total gross claims paid (603,271) (477,493)

(b) Reinsurers’ share of gross claims paid

Life insurance contracts claims paid 26(a)(2) 8,402 5,774

General insurance contracts claims paid 26(b)(1) 183,436 151,199

Total reinsurers’ share of gross claims paid 191,838 156,973

(c) Gross change in outstanding claims

Change in life insurance outstanding claims 129 (1,904)

Change in general insurance outstanding claims (690,671) (28,443)

Total gross change in outstanding claims (690,542) (30,347)

(d) Reinsurers’ share of gross change in outstanding claims

General insurance outstanding claims 627,140 (17,899)

29. Other Liabilities2017 2016

HK$’000 HK$’000

Accruals and other payables 230,188 281,111

Deposit received (note 12) 118,333 –

348,521 281,111

The Group’s other liabilities were current in nature as at 31st December, 2017 and 2016.



31st December, 2017

30. Interest-Bearing Bank Borrowing2017 2016

Effective Effectiveinterest interestrate (%) Maturity HK$’000 rate (%) Maturity HK$’000

Bank loan – secured HIBOR+1.25 2018 150,000 HIBOR+1.25 2017 150,000

The Group’s bank loan is denominated in Hong Kong dollars and secured by the pledge of certain equity securities listed in Hong Kong classified as available-for-sale securities and securities measured at fair value through profit or loss with fair value of not less than HK$150,000,000 (2016: HK$150,000,000) (notes 18 and 20).

31. Deferred TaxThe movements in deferred tax liabilities and assets during the year are as follows:

Deferred tax liabilities

Depreciationallowancein excessof related Revaluation

depreciation of buildings TotalHK$’000 HK$’000 HK$’000

Gross deferred tax liabilities at 1st January, 2016, 31st December, 2016 and 1st January, 2017 430 11,809 12,239

Deferred tax charged/(credited) to statement of profit or loss during the year (note 9) (430) 1,817 1,387

Gross deferred tax liabilities at 31st December, 2017 – 13,626 13,626

Deferred tax assets

Losses available for offsetting

against future taxable profits

HK$’000

At 1st January, 2016 2,343Deferred tax charged to the statement of profit or loss during the year (note 9) (2,343)

Gross deferred tax assets at 31st December, 2016, 1st January, 2017 and 31st December, 2017 –

The Group has tax losses arising in Hong Kong of HK$257,423,000 (2016: HK$286,508,000) that are available indefinitely for offsetting against future taxable profits of the companies in which the losses arose. Deferred tax assets have not been recognised in respect of these losses as they have mainly arisen in subsidiaries of which the principal activities are securities trading and investment holding and it is not considered probable that taxable profits will be available against which the tax losses can be utilised.

There are no income tax consequences attaching to the payment of dividends by the Company to its shareholders.



31st December, 2017

32. Note To The Consolidated Statement Of Cash FlowsChanges in liabilities arising from financing activities

Bank borrowing

HK$’000

At 1st January, 2017 150,000

Changes from financing cash flows –

At 31st December, 2017 150,000

33. CommitmentsThe Group’s share of certain of its joint ventures’ own capital commitments is as follows:

2017 2016

HK$’000 HK$’000

Contracted, but not provided for – 2,025

34. Related Party Transactions(a)

2017 2016Enterprises Enterprises

and individuals and individualsrelated to related to

Directors directors Directors directorsand key and key and key and key

management management management managementpersonnel personnel personnel personnel

HK$’000 HK$’000 HK$’000 HK$’000

Loans and advances granted:Aggregate balance at the end of

the reporting period – 1,916 – 1,910

Interbank activities:Deposits placed – 958,816 – 846,604Interest income – 8,918 – 5,535

Premium income:Gross premiums written 200 4,499 196 7,412Commission expense, net – 2,085 – 1,929



31st December, 2017

34. Related Party Transactions (cont’d)(b) The Group had the following transactions with certain of its joint ventures during the year:

2017 2016

HK$’000 HK$’000

Loans and advances granted:

Aggregate balance as at the end of the reporting period 54,000 56,500

Interest income 1,116 943

Loan and advance received:

Aggregate balance as at the end of the reporting period 26,183 23,640

Interest expenses 1,916 1,415

Reinsurance premium ceded 6 6

(c) The Group had the following transactions with certain of its associates during the year:

2017 2016

HK$’000 HK$’000

Loans and advances granted:

Aggregate balance at the end of the reporting period 256,140 200,765

Interest income 1,606 –

Commission expense paid 12,710 15,037

(d) During the year ended 31st December, 2016, a subsidiary of the Company repurchased 11,571,827 shares

of the Company’s issued ordinary shares at a cash consideration of HK$55,544,770 from a company

controlled by a former director, who resigned during the year ended 31st December, 2016. Further details of

the transaction are set out in the Company’s announcements dated 8th July, 2016 and 11th July, 2016. The

transaction also constitutes a connected transaction as defined in Chapter 14A of the Listing Rules.

(e) Details of the Group’s advances to its joint ventures and associates as at the end of the reporting period are

included in notes 15 and 16 to the financial statements, respectively.

(f) Details of compensation for key management personnel, who are the directors of the Company, and post-

employment benefits of the Group, are included in notes 7 and 6 to the financial statements, respectively.



31st December, 2017

35. Insurance Contracts Liabilities and Reinsurance Assets – Terms, Assumptions and SensitivitiesGeneral insurance contracts

(1) Terms and conditions

The major classes of general insurance written by the Group include property damage, ships, goods in

transit, pecuniary loss, accident and health, general liability, employees’ compensation and motor insurances.

Risks under these policies usually cover a 12-month duration.

For general insurance contracts, the most significant risks arise from natural disasters. For longer tail claims

that take some years to settle, there is also inflation risk. For accident and health contracts, the most

significant risks arise from lifestyle changes, epidemics and medical science and technology improvements.

These risks do not vary significantly in relation to the location of the risk insured by the Group, by type of risk

insured and by industry.

For general insurance contracts, claims provisions (comprising provisions for claims reported by policyholders

and claims incurred but not yet reported) are established to cover the ultimate cost of settling the liabilities

in respect of claims that have occurred and are estimated based on known facts at the end of the reporting

period.

The provisions are refined regularly as part of an ongoing process as claims experience develops, certain

claims are settled and further claims are reported. Outstanding claims provisions are not discounted for the

time value of money.

The measurement process primarily includes projection of future claims costs through a combination of

actuarial and statistical projection techniques like the Chain Ladder and Bornheutter Ferguson method

calculated by an external actuary. In certain cases, where there is a lack of reliable historical data to estimate

claims development, relevant benchmarks of similar business are used in developing claims estimates.

Claims provisions are separately analysed by class of business. In addition, larger claims are usually

separately assessed by loss adjusters. The claims projection assumptions are generally intended to provide

the best estimate of the most likely or expected outcome.

(2) Assumptions

The principal assumption underlying the estimates is the Group’s past claims development experience. This

includes assumptions in respect of average claim costs, claims handling costs and claim numbers for each

accident year. Additional qualitative judgements are used to assess the extent to which past trends may not

apply in the future, for example: one-off occurrence, changes in market factors such as public attitude to

claiming, economic conditions, as well as internal factors such as portfolio mix, policy conditions and claims

handling procedures. Judgement is used to assess the extent to which external factors such as judicial

decisions and government legislation affect the estimates.



31st December, 2017

35. Insurance Contracts Liabilities and Reinsurance Assets – Terms, Assumptions and Sensitivities (cont’d)General insurance contracts (cont’d)

(3) Sensitivities

The general insurance claims provision is sensitive to the above key assumptions. The sensitivity of certain

assumptions, e.g., legislative change and uncertainty in the estimation process, etc., is not possible to

quantify. Furthermore, because of the delays that arise between occurrence of a claim and its subsequent

notification and eventual settlement, the outstanding claim provision is not known with certainty at the end of

the reporting period.

Consequently, the ultimate liabilities will vary as a result of subsequent developments. Differences resulting

from reassessment of the ultimate liabilities are recognised in subsequent financial statements.

(4) Loss development triangle

Reproduced below is an exhibit that shows the development of claims over a period of time on a gross and

net basis.

The tables show the estimates of cumulative incurred claims, including both notified and IBNR claims, for

each successive accident year at the end of each reporting period, together with cumulative claims as at 31st

December, 2017.

Gross general insurance claims2008 and

before 2009 2010 2011 2012 2013 2014 2015 2016 2017 TotalHK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

Accident year 2,802,213 355,504 408,407 549,509 587,258 688,871 681,583 638,217 597,487 1,365,990One year later 2,756,900 355,887 431,873 655,470 615,036 666,854 636,204 613,689 654,702 –Two years later 2,697,875 373,022 475,282 721,217 622,608 669,691 634,304 583,101 – –Three years later 2,755,305 348,747 482,670 728,873 627,162 635,890 583,263 – – –Four years later 2,751,768 343,134 484,380 745,399 622,446 629,147 – – – –Five years later 2,735,671 336,706 482,058 723,872 616,856 – – – – –Six years later 2,713,829 325,240 477,927 675,857 – – – – – –Seven years later 2,697,636 325,383 475,479 – – – – – – –Eight years later 2,687,310 323,982 – – – – – – – –Nine years later 2,669,781 – – – – – – – – –

Current estimate of cumulative gross claims 2,669,781 323,982 475,479 675,857 616,856 629,147 583,263 583,101 654,702 1,365,990 8,578,158

Cumulative gross payments to date (2,639,797) (310,833) (443,467) (634,608) (494,708) (476,036) (396,602) (315,368) (247,171) (223,302) (6,181,892)

Total gross general insurance outstanding claims provision per the consolidated statement of financial position 29,984 13,149 32,012 41,249 122,148 153,111 186,661 267,733 407,531 1,142,688 2,396,266

(Note 26(b))



31st December, 2017

35. Insurance Contracts Liabilities and Reinsurance Assets – Terms, Assumptions and Sensitivities (cont’d)General insurance contracts (cont’d)

(4) Loss development triangle (cont’d)

Net general insurance claims2008 and

before 2009 2010 2011 2012 2013 2014 2015 2016 2017 TotalHK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

Accident year 1,684,546 302,613 331,523 451,474 453,795 548,608 558,328 498,393 457,531 613,420One year later 1,839,842 285,137 344,740 530,070 484,725 538,786 542,235 513,819 471,457 –Two years later 1,893,241 279,614 376,135 567,032 482,317 532,089 509,374 495,951 – –Three years later 1,903,553 259,463 362,799 574,023 483,368 500,027 453,512 – – –Four years later 1,885,113 254,038 361,891 579,055 476,998 484,101 – – – –Five years later 1,863,629 249,595 360,396 553,024 467,149 – – – – –Six years later 1,847,487 242,501 356,385 500,018 – – – – – –Seven years later 1,829,578 242,717 351,588 – – – – – – –Eight years later 1,820,985 240,476 – – – – – – – –Nine years later 1,802,378 – – – – – – – – –

Current estimate of cumulative net claims 1,802,378 240,476 351,588 500,018 467,149 484,101 453,512 495,951 471,457 613,420 5,880,050

Cumulative net payments to date (1,775,566) (229,179) (325,503) (472,964) (365,538) (367,217) (292,479) (262,814) (159,613) (181,794) (4,432,667)

Total net general insurance outstanding claims provision per the consolidated statement of financial position 26,812 11,297 26,085 27,054 101,611 116,884 161,033 233,137 311,844 431,626 1,447,383

(Note 26(b))

36. Fair Value Hierarchy of Financial InstrumentsManagement has assessed that the fair values of cash and cash equivalents, pledged deposits, loans to a joint

venture, an amount due from an associate, financial assets included in loans and advances and other assets,

insurance receivables, insurance payables, amounts due to a joint venture and associates, other liabilities and

interest-bearing bank borrowing approximate to their carrying amounts.

Management is responsible for determining the policies and procedures for the fair value measurement of financial

instruments. At each reporting date, management analyses the movements in the values of financial instruments and

determines the major inputs applied in the valuation. The valuation is reviewed and approved twice a year for interim

and annual financial reporting.

The fair values of the financial assets and liabilities are included at the amount at which the instrument could be

exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.



31st December, 2017

36. Fair Value Hierarchy of Financial Instruments (cont’d)The following tables illustrate the fair value measurement hierarchy of the Group’s financial instruments:

Assets measured at fair value:

Fair value measurement using

Quoted

prices in Significant

active observable

markets inputs

(Level 1) (Level 2) Total

At 31st December, 2017 HK$’000 HK$’000 HK$’000


Equity investments 994,355 1,027,111 2,021,466

Securities measured at fair value through profit or loss 869,717 866,469 1,736,186

1,864,072 1,893,580 3,757,652


Quoted

prices in

active

markets

(Level 1)

Significant

observable

inputs

(Level 2) Total

At 31st December, 2016 HK$’000 HK$’000 HK$’000


Equity investments 838,841 888,091 1,726,932

Securities measured at fair value through profit or loss 832,379 692,391 1,524,770

1,671,220 1,580,482 3,251,702

As at 31st December, 2017 and 2016, the Group had no financial instruments measured at fair value under Level 3

for both financial assets and financial liabilities.

During the years ended 31st December, 2017 and 2016, there were no transfers of fair value measurements

between Level 1 and Level 2 for both financial assets and financial liabilities.

During the years ended 31st December, 2017 and 2016, there were no transfers of fair value measurements into or

out of Level 3 for both financial assets and financial liabilities.



31st December, 2017

36. Fair Value Hierarchy of Financial Instruments (cont’d)Assets for which fair values are disclosed:


Quoted

prices in

active

markets

(Level 1)

Significant

observable

inputs

(Level 2) Total

As at 31st December, 2017 HK$’000 HK$’000 HK$’000

Held-to-maturity securities 566,021 185,820 751,841

Fair value measurement usingQuoted

prices inactive

markets(Level 1)

Significantobservable

inputs(Level 2) Total

As at 31st December, 2016 HK$’000 HK$’000 HK$’000

Held-to-maturity securities 485,559 189,742 675,301

37. Financial Risk Management Objectives and PoliciesThe Group has established policies and procedures for identifying, evaluating, monitoring and controlling the

various types of risks pertaining to the Group’s businesses, which are approved and endorsed by the board of

directors and reviewed regularly by the Group’s management, executive committee, investment committee, fund

management committee and other designated committees or working groups. Material risks are identified and

measured by designated committees and/or working groups before the launch of new products or business

activities, and monitored, documented and controlled against applicable risk limits after the introduction of new

products or services or implementation of new business activities. Internal auditors of the Group also perform regular

audits to ensure compliance with the policies and procedures. The key risks include credit risk, liquidity risk, capital

management risk, interest rate risk, foreign exchange risk, insurance risk, operational risk and equity price risk.

The overall internal control environment and the management policies for the major types of risks are as follows:

(1) Internal control environment

The internal control framework of the Group comprises comprehensive control policies and standards. The

areas of responsibilities of each business and operational unit are clearly defined. Internal control procedures

have been established based on the risk inherent in the individual business unit.

The internal audit department plays an important role in the Group’s internal control framework. It monitors

the effectiveness of the internal control procedures and ensures compliance with the policies and standards

across the whole group. A direct reporting line to the audit committee under the board of directors

safeguards its independence. The audit committee meets periodically to review and discuss financial

performance, internal control, compliance issues and matters raised by the external auditors to ensure that all

audit recommendations are implemented.



31st December, 2017

37. Financial Risk Management Objectives and Policies (cont’d)(2) Credit risk management

Credit risk is the risk that a customer or counterparty in a transaction may default. It arises from the credit

terms which extend to clients, intermediates and reinsurers, and other activities undertaken by the Group.

To manage credit risk, the Group has considered the underlying security and the long-established business

relationship with the counterparty.

There are no significant concentrations of credit risk within the Group as the customer bases of the Group’s

insurance receivables are widely dispersed in different intermediates and direct customers from different

sectors and industries.

The credit risk of the Group’s other financial assets, which comprise cash and cash equivalents, pledged

deposits, held-to-maturity securities, available-for-sale securities, loans and advances and other assets, loans

to a joint venture and amounts due from associates, arises from default of the counterparty, with a maximum

exposure equal to the carrying amounts of these instruments.

Further quantitative data in respect of the Group’s exposure to credit risk arising from loans to a joint venture,

amounts due from associates, held-to-maturity securities, available-for-sale securities, loans and advances

and other assets, and insurance receivables are disclosed in notes 15, 16, 17, 18, 19 and 21 to the financial

statements.

(3) Liquidity risk management

Liquidity risk is the risk that the Group cannot meet its current obligations as they fall due. To manage liquidity

risk, the Group has established liquidity management policies that are pertinent to the operations of business

units.

The Group monitors its risk to a shortage of funds using a recurring liquidity planning tool. This tool considers

the maturity of both its financial instruments and financial assets (e.g., insurance receivables) and the

projected cash flows from operations.



31st December, 2017

37. Financial Risk Management Objectives and Policies (cont’d)(3) Liquidity risk management (cont’d)

The maturity profile of the Group’s financial liabilities as at the end of the reporting period, based on the

contractual undiscounted payments, was as follows:

2017On demand

and lessthan 1 year

1 to 5years

Over5 years Total

HK$’000 HK$’000 HK$’000 HK$’000

Provision for claims reported by

policyholders 236,756 1,242,966 – 1,479,722

IBNR 147,729 775,575 – 923,304

Insurance payables 181,949 – – 181,949

Due to a joint venture 28,099 – – 28,099

Due to associates 4,222 – – 4,222

Other liabilities 348,521 – – 348,521

Interest-bearing bank borrowing 150,270 – – 150,270

1,097,546 2,018,541 – 3,116,087

2016On demand

and lessthan 1 year

1 to 5years

Over5 years Total

HK$’000 HK$’000 HK$’000 HK$’000

Provision for claims reported by

policyholders 135,487 661,495 – 796,982

IBNR 155,635 759,867 – 915,502

Insurance payables 157,233 – – 157,233

Due to a joint venture 25,055 – – 25,055

Due to associates 4,222 – – 4,222

Other liabilities 281,111 – – 281,111

Interest-bearing bank borrowing 150,216 – – 150,216

908,959 1,421,362 – 2,330,321



31st December, 2017

37. Financial Risk Management Objectives and Policies (cont’d)(3) Liquidity risk management (cont’d)

The tables below summarise the expected recovery or settlement of assets of the Group.

Current* Non-current Total31st December, 2017 HK$’000 HK$’000 HK$’000

Property, plant and equipment – 176,450 176,450Investment properties – 280,200 280,200Interests in joint ventures – 208,734 208,734Loans to a joint venture 54,000 – 54,000Interests in associates – 436,700 436,700Due from associates 87,750 168,390 256,140Held-to-maturity securities 141,258 584,300 725,558Available-for-sale securities – 3,616,130 3,616,130Pledged deposits 206,488 – 206,488Loans and advances and other assets 106,060 11,275 117,335Securities measured at fair value through

profit or loss 1,736,186 – 1,736,186Insurance receivables 225,162 – 225,162Reinsurance assets 1,211,355 – 1,211,355Cash and cash equivalents 2,627,224 – 2,627,224Assets of a disposal group classified

as held for sale 105,084 – 105,084

Total assets 6,500,567 5,482,179 11,982,746

Current* Non-current Total31st December, 2016 HK$’000 HK$’000 HK$’000

Property, plant and equipment – 335,487 335,487Investment properties – 28,200 28,200Interests in joint ventures – 280,104 280,104Loans to a joint venture 56,500 – 56,500Interests in associates – 357,817 357,817Due from associates 32,375 168,390 200,765Held-to-maturity securities 91,488 560,481 651,969Available-for-sale securities – 3,321,596 3,321,596Pledged deposits 158,915 – 158,915Loans and advances and other assets 116,556 12,796 129,352Securities measured at fair value through

profit or loss 1,524,770 – 1,524,770Insurance receivables 197,465 – 197,465Reinsurance assets 583,379 – 583,379Cash and cash equivalents 2,433,390 – 2,433,390

Total assets 5,194,838 5,064,871 10,259,709

* Expected recovery or settlement within 12 months from the end of the reporting period.



31st December, 2017

37. Financial Risk Management Objectives and Policies (cont’d)(4) Capital management

Externally imposed capital requirements are mainly set and regulated by the Hong Kong Insurance Authority.

These requirements are put in place to ensure sufficient solvency margins. Further objectives are set by the

Group to maintain a strong credit rating and healthy capital ratios in order to support its business objectives

and maximise shareholders’ value.

The Group manages its capital requirements by assessing any shortfalls between the reported and required

Relevant Amount, as defined in section 10 of the Hong Kong Insurance Companies Ordinance, on a regular

basis. Adjustments to current capital levels are made in light of changes in economic conditions and risk

characteristics of the Group’s activities. In order to maintain or adjust the capital structure, the Group may

adjust the amount of dividends paid or return capital to ordinary shareholders.

The Group fully complied with the externally imposed requirements of the Relevant Amount during the

reported financial periods and no changes were made to its capital base, objectives, policies and processes

for managing capital from the previous year.

The table below summarises the required Relevant Amount across the Group.

Life Non-life

insurance insurance

HK$’000 HK$’000

2017 required Relevant Amount 24,039 164,738

2016 required Relevant Amount 21,812 158,385

The required Relevant Amount is determined by the application of a formula that contains variables for

premiums and claims, expenses and reserve items. It also takes into account distribution of assets and

investment returns.

In addition, the Group monitors capital using a gearing ratio, which is net debt divided by total capital plus

net debt. Net debt includes insurance contracts liabilities, insurance payables, amounts due to a joint venture

and associates, interest-bearing bank borrowing and other liabilities, less cash and cash equivalents and

securities measured at fair value through profit or loss. Capital represents equity attributable to equity holders

of the Company. As at 31st December, 2017, the Group had no net debt.



31st December, 2017

37. Financial Risk Management Objectives and Policies (cont’d)(5) Interest rate risk management

Interest rate risk is the risk that the value/future cash flows of a financial instrument will fluctuate because of

changes in market interest rates.

Floating rate instruments expose the Group to cash flow interest rate risk, whereas fixed interest rate

instruments expose the Group to fair value interest rate risk.

The Group’s interest rate risk policy requires it to manage interest rate risk by maintaining an appropriate mix

of fixed and variable rate instruments. The policy also requires it to manage the maturities of interest-bearing

financial assets. Interest on floating rate instruments is repriced at intervals of less than one year. Interest on

fixed interest rate instruments is priced at inception of the financial instruments and is fixed until maturity.

The analysis below is performed for reasonably possible movements in interest rates with all other variables

held constant, for securities measured at fair value through profit or loss, interest-bearing bank deposits,

loans and advances and other assets, loans to joint ventures, an amount due to a joint venture and interest-

bearing bank borrowing showing the pre-tax impact on profit and equity. The correlation of variables will have

a significant effect in determining the ultimate impact on interest rate risk, but to demonstrate the impact due

to changes in variables, variables had to be changed on an individual basis.

2017 2016Increase/(decrease) Increase/(decrease)

Change in in profit in equity* in profit in equity*interest rate HK$’000 HK$’000 HK$’000 HK$’000

Securities measured at fair value through profit or loss

+50 basis points (856) – (1,552) ––50 basis points 856 – 1,552 –

Interest-bearing bank deposits

+50 basis points 13,779 – 12,715 ––50 basis points (13,779) – (12,715) –

Loans and advances and other assets

+50 basis points 64 – 73 ––50 basis points (64) – (73) –

Due to a joint venture +50 basis points (131) – (118) ––50 basis points 131 – 118 –

Interest-bearing bank borrowing

+50 basis points (750) – (750) ––50 basis points 750 – 750 –

* Excluding retained profits



31st December, 2017

37. Financial Risk Management Objectives and Policies (cont’d)(6) Foreign exchange risk management

Foreign exchange risk is the risk that the holding of foreign currencies will affect the Group’s position as a

result of a change in foreign currency exchange rates. The Group’s foreign exchange risk primarily arises from

its overseas operations, reinsurance and investment activities.

The following table demonstrates the sensitivity at the end of the reporting period to a reasonably possible

change in the exchange rates of Thai Baht, Japanese Yen and Renminbi, with all other variables held

constant, of the Group’s profit before tax (due to changes in the fair value of monetary assets and liabilities)

and the Group’s equity (due to changes in the available-for-sale securities).

Change in Decrease

exchange

rate

in profit

before tax

Decrease

in equity*

% HK$’000 HK$’000

2017

If Thai Baht weakens against

Hong Kong dollar –5% (11,293) (101,073)

If Japanese Yen weakens against

Hong Kong dollar –8% (2,632) –

If Renminbi weakens against

Hong Kong dollar –7% (5,800) (7)

2016

If Thai Baht weakens against

Hong Kong dollar –5% (9,629) (77,507)

If Japanese Yen weakens against

Hong Kong dollar –8% (2,671) –

If Renminbi weakens against

Hong Kong dollar –7% (12,030) (7)




31st December, 2017

37. Financial Risk Management Objectives and Policies (cont’d)(7) Insurance risk management

The business of the Group comprises both life and general insurance contracts, and general insurance

contracts represent 96% of its total gross premiums written.

The risk under an insurance contract is the risk that an insured event will occur including the uncertainty

of the amount and timing of any resulting claim. The principal risk the Group faces under such contracts is

that the actual claims and benefit payments may exceed the carrying amount of insurance liabilities. This is

influenced by the frequency of claims, severity of claims, actual benefits paid which are greater than originally

estimated and subsequent development of long tail claims.

The variability of risks is improved by diversification of risk of loss to a large portfolio of insurance contracts

as a more diversified portfolio is less likely to be affected across the board by change in any subset of the

portfolio, as well as unexpected outcomes.

The variability of risks is also improved by careful selection and implementation of underwriting strategies,

which are designed to ensure that risks are diversified in terms of type of risk and level of insured benefits.

This is largely achieved through diversification across industry sectors and geographical area. Furthermore,

strict claim review policies to assess all new and ongoing claims, regular detailed review of claims handling

procedures and frequent investigation of possible fraudulent claims are all policies and procedures put in

place to reduce the risk exposure of the Group. The Group further enforces a policy of actively managing and

prompt pursuing of claims, in order to reduce its exposure to unpredictable future developments that can

negatively impact the Group.

The majority of reinsurance business ceded is placed on both the proportional and excess of loss basis with

retention limits varying by product line and territory. Excess-of-loss reinsurance is designed to mitigate the

Group’s net exposure to catastrophic losses. Amounts recoverable from reinsurers are estimated in a manner

consistent with the assumptions used for ascertaining the underlying policy benefits and are presented in the

statement of financial position as reinsurance assets.

Although the Group has reinsurance arrangements, it is not relieved of its direct obligations to its

policyholders and thus a credit exposure exists with respect to reinsurance ceded, to the extent that any

reinsurer is unable to meet its obligations assumed under such reinsurance agreements.

The Group’s placement of reinsurance is diversified such that it is neither dependent on a single reinsurer nor

are the operations of the Group substantially dependent upon any single reinsurance contract. The Group

also considers the long-established business relationship with the reinsurers.



31st December, 2017

37. Financial Risk Management Objectives and Policies (cont’d)(7) Insurance risk management (cont’d)

The Group also has limited its exposure to a certain level by imposing maximum claim amounts on certain

contracts as well as the use of reinsurance arrangements in order to limit exposure to catastrophic events,

such as hurricanes, earthquakes and flood damages. The purpose of these underwriting and reinsurance

strategies is to limit the exposure to catastrophes to a pre-determined maximum amount based on the

Group’s risk appetite as decided by management. For a single realistic catastrophic event, this maximum

amount is less than 5% of the shareholders’ equity of the wholly-owned subsidiary, Asia Insurance Company,

Limited, on a net basis. In the event of such a catastrophe, counterparty exposure to a single reinsurer is

estimated not to exceed 5% of the shareholders’ equity of the wholly-owned subsidiary, Asia Insurance

Company, Limited.

The Group uses its own and commercially available proprietary risk management software to assess

catastrophe exposure. However, there is always a risk that the assumptions and techniques used in these

models are unreliable or that claims arising from an unmodelled event are greater than those arising from a

modelled event.

2017 2016Insurance Reinsurers’ Insurance Reinsurers’

contracts share of contracts share ofliabilities liabilities Net liabilities liabilities NetHK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

Employees’ compensation 877,966 (106,484) 771,482 817,746 (94,824) 722,922Property damage 1,180,573 (792,650) 387,923 550,226 (193,102) 357,124General liability 433,539 (170,154) 263,385 466,785 (164,538) 302,247Motor vehicle 352,947 (63,810) 289,137 327,954 (44,440) 283,514Others 276,175 (78,257) 197,918 278,110 (86,475) 191,635

Total general insurance 3,121,200 (1,211,355) 1,909,845 2,440,821 (583,379) 1,857,442

As at 31st December, 2017, over 90% (2016: 90%) of the general insurance contracts liabilities were related

to the business written in Hong Kong, Macau and Mainland China.

(8) Operational risk management

Operational risk is the risk of financial loss resulting from procedural errors, system failures, fraud and other

events.

The Group manages operational risk by maintaining adequate documentation of its operating procedures to

facilitate training and quality performance. A proper internal control system is incorporated in the operation

workflow to minimise the risk of losses caused by human errors. To reduce the interruptions to business

activities caused by system failures or natural disasters, back-up systems and contingency business

resumption plans are in place for critical business and back-office functions. Detailed recovery procedures are

properly documented, with periodic drills conducted to ensure that the procedures are current and correct.



31st December, 2017

37. Financial Risk Management Objectives and Policies (cont’d)(9) Equity price risk management

Equity price risk is the risk that the fair values of equity securities decrease as a result of changes in the levels

of equity indices and the values of individual securities. The Group is exposed to equity price risk arising from

individual equity investments classified as securities measured at fair value through profit or loss (note 20) and

available-for-sale securities (note 18) as at 31st December, 2017. The Group’s listed investments are mainly

listed on the stock exchanges of Hong Kong, the United States, and Thailand and are valued at quoted

market prices at the end of the reporting period.

The following table demonstrates the sensitivity to every change of 15%, 10%, 5% and 10% in the fair

values of the securities listed in Hong Kong, the United States, Thailand and all other areas, respectively,

with all other variables held constant and before any impact on tax, based on their carrying amounts at the

end of the reporting period. For the purpose of this analysis, the impact for the available-for-sale securities

is deemed to be on the available-for-sale investment reserve and no account is given for factors such as

impairment which might impact on the statement of profit or loss.

Increase/

Carrying (decrease) Increase/

Change in amount of in profit (decrease)

sensitivity securities before tax in equity*

% HK$’000 HK$’000 HK$’000

2017

Equity investments in:

Hong Kong

– Listed securities measured at +15% 435,505 65,326 –

fair value through profit or loss –15% 435,505 (65,326) –

United States



Thailand

– Available-for-sale securities +5% 2,021,466 – 101,073

–5% 2,021,466 – (101,073)



All other areas






31st December, 2017

37. Financial Risk Management Objectives and Policies (cont’d)(9) Equity price risk management (cont’d)

Increase/Carrying (decrease) Increase/

Change in amount of in profit (decrease)sensitivity securities before tax in equity*

% HK$’000 HK$’000 HK$’000

2016

Equity investments in:Hong Kong

– Available-for-sale securities +15% 176,787 – 26,518–15% 176,787 – (26,518)

– Listed securities measured at +15% 321,166 48,175 –fair value through profit or loss –15% 321,166 (48,175) –

United States– Listed securities measured at +10% 266,015 26,602 –


Thailand– Available-for-sale securities +5% 1,550,145 – 77,507

–5% 1,550,145 – (77,507)

– Listed securities measured at +5% 191,081 9,554 –fair value through profit or loss –5% 191,081 (9,554) –

All other areas– Listed securities measured at +10% 10,473 1,047 –





31st December, 2017

38. Statement of Financial Position of the CompanyInformation about the statement of financial position of the Company at the end of the reporting period is as follows:

2017 2016

HK$’000 HK$’000

ASSETS

Property, plant and equipment – –

Interests in subsidiaries 1,721,957 1,741,457

Due from subsidiaries 1,031,688 1,140,272

Interest in a joint venture – –

Available-for-sale securities 1,524,085 1,524,085

Loans and advances and other assets 9,205 9,002

Cash and cash equivalents 298,783 231,360

Total assets 4,585,718 4,646,176

EQUITY AND LIABILITIES

Equity

Issued capital 978,478 978,478

Reserves (note) 3,454,236 3,496,743

Proposed final dividend 73,386 53,816

Total equity 4,506,100 4,529,037

Liabilities

Other liabilities 10,131 7,642

Due to subsidiaries 69,487 109,497

Total liabilities 79,618 117,139

Total equity and liabilities 4,585,718 4,646,176



31st December, 2017

38. Statement of Financial Position of the Company (cont’d)Note:

A summary of the Company’s reserves is as follows:

Share Capital

premium Capital redemption Retained

account reserve reserve profits Total

HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

At 1st January, 2016 560,531 60,060 38,821 2,961,157 3,620,569

Profit for the year and total

comprehensive income for the year – – – 96,318 96,318

Final 2015 dividend – – – 86 86

Interim 2016 dividend – – – (24,557) (24,557)

Repurchase of shares – – – (141,857) (141,857)

Transfer to capital redemption reserve – – 40,722 (40,722) –

Proposed final 2016 dividend – – – (53,816) (53,816)

At 31st December, 2016 and

at 1st January, 2017 560,531 60,060 79,543 2,796,609 3,496,743

Profit for the year and total

comprehensive income for the year – – – 70,018 70,018

Interim 2017 dividend – – – (39,139) (39,139)

Proposed final 2017 dividend – – – (73,386) (73,386)

At 31st December, 2017 560,531 60,060 79,543 2,754,102 3,454,236



31st December, 2017

39. Particulars of Principal SubsidiariesParticulars of the Company’s principal subsidiaries as at 31st December, 2017 are as follows:

Place ofincorporation Percentage of equity Issued Principal

Name and operation attributable to the Company share capital activitiesDirect Indirect

Asia Insurance Company, Limited

Hong Kong 100 – HK$2,000,000,000 Insurance

Asia Investment Services Limited

British Virgin Islands

100 – HK$10,000,000 Investment holding

AFH Investments (BVI) Limited

British Virgin Islands

100 – US$1,000,000 Investment holding

Asia Insurance (Finance) Limited

Hong Kong – 100 HK$25,000,000 Mortgage loan financing

Chamberlain Investment Limited

Republic of Liberia

– 100 US$100 Investment holding

Progressive Investment Company Limited

Hong Kong – 100 HK$10,000,000 Property investment

Bedales Investment Limited Republic of Liberia

– 100 Ordinary US$100

Preference US$3,000,000

Investment holding

Asia Investment Services (HK) Limited

Hong Kong – 100 HK$10,000 Investment holding

Asia Insurance (Investments) Limited

Hong Kong – 69.5 HK$78,000,000 Investment holding

Asia Financial (Nominees) Limited

Hong Kong – 100 HK$2 Provision of nominee services

AFH Investment Company Limited

Hong Kong – 100 HK$1 Investment holding

AFH Realty Investment Company Limited


AFH International Company Limited




31st December, 2017

Place ofincorporation Percentage of equity Issued Principal

Name and operation attributable to the Company share capital activitiesDirect Indirect

AFH Health Care Services Limited Hong Kong – 100 HK$1 Provision of health care services

Top Hover Limited British Virgin Islands

– 100 US$1 Investment holding

AFH Health Care Investment Limited

Hong Kong 100 – HK$25,700,000 Investment holding

Wellness Realty Limited Hong Kong 100 – HK$10,000 Property investment

The above table lists the subsidiaries of the Company which, in the opinion of the directors, principally affected the

results for the year or formed a substantial portion of the net assets of the Group. To give details of other subsidiaries

would, in the opinion of the directors, result in particulars of excessive length.

The principal place of operations of the principal subsidiaries is mainly Hong Kong.

40. Approval of the Financial StatementsThe financial statements were approved and authorised for issue by the board of directors on 22nd March, 2018.

39. Particulars of Principal Subsidiaries (cont’d)Particulars of the Company’s principal subsidiaries as at 31st December, 2017 are as follows: (cont’d)